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The 

Trust: Its Book 

BEING A PRESENTATION OF THE SEVERAL ASPECTS 
OF THE LATEST FORM OF INDUSTRIAL EVOLUTION 

By 

CHARLES R. FLINT, JAMES J. HILL, 

JAMES H. BRIDGE, S. C. T. DODD, 

AND FRANCIS B. THURBER 

WITH NUMEROUS EXPRESSIONS OF REPRE- 
SENTATIVE OPINION AND A BIBLIOGRAPHY 

Edited by JAMES H. BRIDGE 



NEW YORK 

DOUBLEDAY, PAGE & COMPANY 
1902 









THE : . -PY o^ 

CONGRESS, 
T'vo C 

COCV^'C-MT =NTRY 

CLASS O-XXcx No. 
COPY B, 



Copyright, 1902, by 

Doubleday, Page & Co. 

Published, May, 1902 



ACKNOWLEDGMENTS 

The Editor's thanks are due and hereby tendered to 
the publisher of The North American Review for permis- 
sion to republish Chapters IV, VI and VII, which first 
appeared in that magazine; and als® to Mr. Dodd for his 
contribution of the second chapter, which originally 
formed the substance of an address to the students of the 
Syracuse University. Mr. Flint's essays are based on 
addresses and speeches delivered at the Providence Com- 
mercial Club, April 29th, 1892, at a complimentary din- 
ner given to him by W. M. Wood, Esq., at Boston, May 
25th, 1899, and at the annual dinner of the Illinois Man- 
ufacturers' Association, October 9th, 1900 



CONTENTS 



INTRODUCTION. 

AMERICA'S COMMERCIAL PRIMACY AND 
THE TRUST 

James H. Bridge 

America's commercial expansion just begun — Our 
rapid growth in population and productive power 
— Some comparisons — Effects of good feeding — 
Surprising growth of wealth : its general benefits — 
America's commercial independence — Superior 
systems of transportation — Underlying causes — 
The law of evolution applied — Industrial central- 
ization a natural process; its inevitableness — ■ 
Probable lines of future development — Insuffi- 
ciency of law of competition — Struggle for exist- 
ence not Nature's last word; universal co-operation 
its logical successor — Evils of transition from 
lower to higher industrial life; their passing char- 
acter — Political effects of American primacy on 
Europe — Higher import of our commercial con- 
quest xiii 



CHAPTER I. 
COMBINATIONS AND CRITICS 

Charles R. Flint 

Combination, a natural evolution; its use and abuse — 
Webster's broad views contrasted with the reaction- 
ary opinion of a French philosopher — Macaulay's 
description of early English opposition to improved 
stage-coach transportation — Combination neces- 
sary to self-preservation — Aggregation of intellect 
accompanies combination of capital — General bene- 

vii 



viii The Trust: Its Book 



fits of machinery; far-reaching effects illus- 
trated: diminution of crime — Injudicious legislation 
deplored — Competition not always beneficial — 
Alexander Hamilton on manufactures — Some al- 
leged disadvantages of combination discussed: mo- 
nopolies: appeal to experience; higher prices: illus- 
tration from Manhattan Railway — Cleveland on 
protection of invested capital — Alleged cheapen- 
ing of quality considered — Public benefits of rail- 
way consolidations — Effects of tariff in creating de- 
structive competition — Benefits of competition 
exaggerated; illustrations from England — New 
industries inevitably injure those they displace; 
result incidental, not intentional — Legislation 
originally directed against unions of workers — Sur- 
vival of fittest applied to industrialism; effect event- 
ually good — To prohibit combination is to protect 
the unskilled — Futility of laws to suppress intelli- 
gence — Individuality not destroyed by combina- 
tion — Elevating influence of specialization — Ag- 
gregated capital not yet a menace; impolitic to seek 
to limit it; opinion of Daniel Webster — Uses of the 
demagogue — Institutions not to be judged by short- 
comings alone; illustrations from marriage, religion 
and politics — Political unity effected by industry — 
Consolidations discredited by legal defects: new 
laws for new conditions — English wisdom in re- 
pealing restrictive measures; other legislatures 
following — Freer trade logical outcome of present 
evolution: example from oil trade — Industrial 
ideals possible under combination 



CHAPTER II. 

AGGREGATED CAPITAL: ITS HISTORY AND 
INFLUENCE 

S. C. T. Dodd 

Aggregated capital unknown to ancients; trade con- 
sidered ignoble — Similar conceptions in England; 
recent changes — Idyls of Merrie England only im- 
aginary; real state described — Factors of modern 
progress — The Hanseatic League a trust; its civiliz- 
ing effects — State of England in the Sixteenth Cen- 
tury — Capital as a vitalizing force — Revolutions 
effective by factory system and steam transporta- 



Contents ix 

tion — The glory of work — Natural law in industrial- 
ism — How capital through manufactures has bene- 
fited mankind — Contrasts between ancient and 
modern methods in milling, spinning, iron making, 
transportation — Machinery displaces labour; re- 
sulting hardships only temporary; final outcome 
increased demand for labour, at better wages, short- 
er hours, and added domestic comfort — Large pro- 
duct of mechanical aids to labour — Rewards of 
labour ever increasing — Concentration a natural 
law — Condition of foreign working classes con- 
trasted — Isolated communities at home — Evils of 
historic monopolies; their failure was inevitable — 
Injurious effects of governmental control of indus- 
tries — Aggregated capital not to blame for results 
of unwise legislation; examples — Impotency of 
regulations against natural developments — Eng- 
land's prosperity due to relaxation of artificial re- 
straints — American colonial history reviewed — 
Right of association early recognized in U. S.; re- 
cent tendency to revert to ancestral errors — Con- 
centration and competition; effects on prices, on 
individuality, on wages — Vast aggregations of capi- 
tal in railways; their results in cheapening products; 
examples — Aggregated capital in the oil trade; 
benefits — Employee as shareholders — Limitations 
of aggregated capital: cannot work miracles — 
Errors of doctrinaires; poverty not itself a virtue, 
riches no crime — Poverty and defective work; effi- 
ciency and its natural rewards — "Sweating"; its 
evils and remedy — Socialism and communism no 
cure for poverty and suffering — Creators of wealth 
not reprehensible; large fortunes a public benefit — 
Inequalities natural and unpreventable — All good 
things accompanied by some evil — Industrial lib- 
erty the lesson of history 39 



CHAPTER III. 

THE GOSPEL OF INDUSTRIAL STEADINESS 

Charles R. Flint 

Right of capital to combine now conceded — How to 
minimize mistakes — During present prosperity 
liberal allowances for depreciation should be made; 
surpluses should be increased — New capitalization 
should not be based on abnormal earnings: illustra- 



The Trust: Its Book 



tion from West Shore Railroad — Reaction cer- 
tain — Gospel of steadiness preached — Tempta- 
tions to over-speculation — In consolidations good 
will and individuality of constituent companies 
should be preserved, best managers retained — 
Some disadvantages; how to offset them — Compe- 
tition among department managers to be encour- 
aged — Lessons furnished by England — Advanta- 
ages of large aggregations of capital and ability; 
contrasted with past demoralization — Results of 
combinations on our exports — "Trade follows the 
price;" the flag follows the trade — Industrial wars 
demand trained combatants — Industrials' shares 
as investments — Workman now an overseer of ma- 
chines; receives the wages of intelligence — The so- 
called "Trust Issue" in politics — Humanity's 
emancipation proclamations written by great in- 
ventors . . . . . . . .81 



CHAPTER IV. 
COMBINATIONS AND THE PUBLIC 

James J. Hill 

Combinations and public hostility ; due to misconcep- 
tions — Old trusts and new combinations; dif- 
erences; former illegal — Wasteful methods con- 
trasted — Combinations bring higher wages, lower 
executive expenses; increased efficiency of plants 
and values — Injuries incidental and limited; bene- 
fits general — To workmen, diminished risk of la- 
bour conflicts; superior mechanical aids; freedom 
to invest and share profits — To consumers, lower 
prices — Permanence dependent on good results — 
Called forth by changed industrial conditions — 
Benefits in railroading: reduced cost of operation; 
limitation of destructive competition — Financial 
interest of public in stable conditions . . . 9 5 



CHAPTER V. 

THE TRUST: AN ALLIANCE OF WORK, BRAINS 
AND MONEY 

Charles R. Flint 

Combinations as distinguished from trusts; latter, as 
originally formed, full of imperfections and objec- 



Contents xi 

tionable features — The name, however, should be 
preserved — Opposition to industrial development; 
history again repeating itself — Grant's amusing 
speech — Sound judgment not disturbed by clamour 
— Economies of civilization — Our prosperity; the 
equitable division of its advantages between capi- 
tal, superintendence and labour — The question of 
dividends versus interest — Higher standard of in- 
telligence demanded by centralization; its propor- 
tionate reward — Mr. Schwab as a type — Interde- 
pendence a trait of civilization — Tilden a monopol- 
ist of intellect — Present tendency to minimum of 
profits, of maximum of wage; as results from high 
industrial development — Wealth of the wage-earn- 
ers — All interests benefited by combination in man- 
ufacture — The same is noted in distribution — In- 
dustrials more conservatively capitalized than 
railroads; exceptions that call for legislative cor- 
rection — Wealth as a trust; its proper uses facili- 
tated and fostered by consolidations — Industrial 
leaders and their great work — Decentralization of 
ownership progressing — Good effects of majority 
rule — Confidence the foundation of business activ- 
ity — Political agitation; injurious effects on trade — 
Need for conservatism in laws — Our trade balance 
as a strength-giving factor — Relation of wages to 
exports; illustration from China — A hint at our 
future destiny in 



CHAPTER VI. 

INFLUENCE OF THE TRUST ON PRICES 
Francis B. Thurber 

"A trust of trusts" and the fear of unreasonable 

S rices: how far justified — Railway consolidations 
ave induced lower rates and improved service — 
Standard Oil Company and prices — The Sugar 
Trust: effect of tariff changes on prices; effect of 
competition; of increased production; of improved 
methods — High commercial death-rate before for- 
mation of trust — Effects of unreasonable competi- 
tion — Prices of paper unaffected by tariff or trusts 
— The Steel Trust: forecast of trend of prices; com- 
parison offcEnglish and American prices — Prices of 
other staples: wool, coffee, cotton — Frequent fluctu- 



The Trust: Its Book 



tion from West Shore Railroad — Reaction cer- 
tain — Gospel of steadiness preached — Tempta- 
tions to over-speculation — In consolidations good 
will and individuality of constituent companies 
should be preserved, best managers retained — 
Some disadvantages; how to offset them — Compe- 
tition among department managers to be encour- 
aged — Lessons furnished by England — Advanta- 
ages of large aggregations of capital and ability; 
contrasted with past demoralization — Results of 
combinations on our exports — "Trade follows the 
price;" the flag follows the trade — Industrial wars 
demand trained combatants — Industrials' shares 
as investments — Workman now an overseer of ma- 
chines; receives the wages of intelligence — The so- 
called "Trust Issue" in politics — Humanity's 
emancipation proclamations written by great in- 
ventors 81 



CHAPTER IV. 
COMBINATIONS AND THE PUBLIC 

James J. Hill 

Combinations and public hostility ; due to misconcep- 
tions — Old trusts and new combinations; dif- 
erences; former illegal — Wasteful methods con- 
trasted — Combinations bring higher wages, lower 
executive expenses; increased efficiency of plants 
and values — Injuries incidental and limited; bene- 
fits general — To workmen, diminished risk of la- 
bour conflicts; superior mechanical aids; freedom 
to invest and share profits — To consumers, lower 
prices — Permanence dependent on good results — 
Called forth by changed industrial conditions — 
Benefits in railroading: reduced cost of operation; 
limitation of destructive competition — Financial 
interest of public in stable conditions . . '95 

CHAPTER V. 

THE TRUST: AN ALLIANCE OF WORK, BRAINS 
AND MONEY 

Charles R. Flint 

Combinations as distinguished from trusts; tatter, as 
. originally formed, full of imperfections and objec- 



Contents xi 



tionable features — The name, however, should be 
preserved — Opposition to industrial development; 
history again repeating itself — Grant's amusing 
speech — Sound judgment not disturbed by clamour 
— Economies of civilization — Our prosperity; the 
equitable division of its advantages between capi- 
tal, superintendence and labour — The question of 
dividends versus interest — Higher standard of in- 
telligence demanded by centralization; its propor- 
tionate reward — Mr, Schwab as a type — Interde- 
pendence a trait of civilization — Tilden a monopol- 
ist of intellect — Present tendency to minimum of 
profits, of maximum of wage; as results from high 
industrial development — Wealth of the wage-earn- 
ers — All interests benefited by combination in man- 
ufacture — The same is noted in distribution — In- 
dustrials more conservatively capitalized than 
railroads; exceptions that call for legislative cor- 
rection — Wealth as a trust; its proper uses facili- 
tated and fostered by consolidations — Industrial 
leaders and their great work — Decentralization of 
ownership progressing — Good effects of majority 
rule — Confidence the foundation of business activ- 
ity — Political agitation; injurious effects on trade — 
Need for conservatism in laws — Our trade balance 
as a strength-giving factor — Relation of wages to 
exports; illustration from China — A hint at our 
future destiny in 



CHAPTER VI. 

INFLUENCE OF THE TRUST ON PRICES 
Francis B. Thurber 

A trust of trusts" and the fear of unreasonable 

Slices: how far justified — Railway consolidations 
ave induced lower rates and improved service — 
Standard Oil Company and prices — The Sugar 
Trust: effect of tariff changes on prices; effect of 
competition; of increased production; of improved 
methods — High commercial death-rate before for- 
mation of trust — Effects of unreasonable competi- 
tion — Prices of paper unaffected by tariff or trusts 
— The Steel Trust: forecast of trend of prices; com- 
parison of ^English and American prices — Prices of 
other staples: wool, coffee, cotton — Frequent fluctu- 



xii The Trust: Its Book 



ations results of power and machinery — Relative 
productive power of hand and machine labour — 
Some striking illustrations — Great increase of pro- 
ductive power in the U. S. — Probable effect on the 
world, and on ourselves — Antidote to alarmists — 
Suggestions for legislation — Carnegie's kaleido- 
scopic conception 135 



CHAPTER VII. 

WHAT COMBINATION HAS DONE FOR CAPITAL 
AND LABOUR 

Charles R. Flint 

Launching a fallacy, its ease; effects — Misconceptions 
concerning industrial capitalizations — Some facts 
on values and investments — Early mistakes of rail- 
road incorporators ; their lesson learnt — A compari- 
son of investment values ; ^ industrials show better 
than railways — Consolidations mean distribution 
of ownership ; therefore tend to political stability — 
Large capitalizations and real values; example of 
Steel Trust — Extent of credit system; its superior- 
ity over old methods — Popular opposition to pro- 
gress illustrated afresh — Advantages of combina- 
tion reviewed ; influence on our commercial suprem- 
acy 151 



APPENDIX 

I. THE TRUST AND REPRESENTATIVE 

OPINION l6 g 

II. THE TRUST IN OPERATION , . .207 

III. A LIST OF BOOKS RELATING TO 

TRUSTS 2 2 7 



INTRODUCTION 

AMERICA'S COMMERCIAL PRIMACY 
AND THE TRUST 

James H. Bridge 

The industrial supremacy of the United 
States is the most recent and conspicuous fact 
of the age. The suddenness with which the 
Republic has seized upon the leadership of 
the world has left the old nations bewildered 
and afraid. Their alarm is justified. Her 
surprising progress in manufactures and min- 
ing, her great accumulation of wealth, her 
rapid development of the resources of her 
magnificent territory, her energetic utilization 
of the forces of nature, which have character- 
ized the later years of her national life, but 
seem as the tentative efforts of a youth testing 
his newly-attained manhood. The century 
just past marked the growth of the nation to 
adolescence; the present one promises to wit- 
ness the perfection of its maturity. For over 
a hundred years the American people have 
been welding themselves together as a nation. 
They have been occupied with the conquest 
of this great continent, and planning for its 
economical development. The work is done. 
With youthful vigour and ambition, flushed 

xiii 



xiv The Trust: Its Book 

with a century of success, the nation is now- 
casting about for fresh fields to conquer, and 
the world is before her. 

During her childhood, the nation grew as a 
child. Her numbers were repeatedly doubled 
in twenty-five years. Now, with a population 
double that of France, of Great Britain, of 
Italy, or of combined Spain and Scandinavia, 
her rate of growth still vastly exceeds that of 
any other country. It has taken France one 
hundred and fifty years to double her popula- 
tion. Now her numbers are diminishing ; she is 
out of the race. England, whose natural increase 
has surpassed that of any other European power, 
took seventy years to double her numbers, 
and even that rate is no longer maintained. 
In seventy years America added to her num- 
bers almost as many as the present population 
of France, England and Scotland combined. 
From thirteen millions to eighty millions is 
the record of the Republic from 1831 to 1901. 

The unprecedented multiplication of Ameri- 
ca's population, however, is but an imperfect 
index of her growth. While the people have 
increased five-fold during the century, their 
productive power has multiplied about forty 
times. Measured in foot tons, the daily 
mechanical energy of the nation has advanced 
frpm 4,293 millions in 1820 to 160,000 millions 
in 1902. In other words we have, as a nation, 
nearly forty times as much power to work as 
had our predecessors eighty-two years ago; 



Introduction xv 

and each unit of us, babies included, has 2,000 
foot tons daily, as against 446 in 1820. When 
we remember that the day's work of a healthy 
dock labourer represents only 325 foot tons, 
we begin to realize what this tremendous 
potential of the American baby is. In Eng- 
land the ratio is 1470, — only what it was in the 
United States twenty years ago. So that man 
for man, industrially considered, the American 
is twenty years ahead of the Englishman. 
The difference is greater when other nations 
are brought to the test ; for slow and conserva- 
tive as England is in comparison with ourselves, 
she is still far ahead of her neighbours in 
Europe. In Germany the ratio is only 952; 
in France it is 930; in Spain 600; in Austria, 
so belligerent commercially, it is only 575; 
and finally Italy comes with 390 ! Thus one 
American, aided with the mechanical appli- 
ances he has developed, can do more work 
than an Englishman and an Italian combined; 
than two Frenchmen; or two Germans, or 
three Spaniards and Austrians, or than five 
Italians, all similarly equipped in their own 
country. As we have reached a point in social 
evolution when men and nations are being 
tested by their productive rather than their 
destructive power, the comparison must be 
considered a fair one. There used to be a 
time, not long ago, when one Englishman was 
equal to half a dozen Frenchmen, or one 
Frenchman equal to an indefinite number of 



xvi The Trust: Its Book 

Englishmen, according to the respective nation- 
ality of the boaster; but that was a measure 
of prowess in arms, not of effectiveness in 
foot-tons. 

If the total working power of the nations 
is compared, the difference in favour of Amer- 
ica is even more striking. Against the 160,000 
millions of the Republic, England has about 
65,000 millions, Germany 52,000, and so on 
down the list to Italy with something like 
13,000 millions. 

At the present time the increase in America's 
working power is so rapid that the next ten 
years will see an addition to her already- 
supreme figures greater than the present total 
of England or of Germany. Every factory 
built, every acre brought under mechanical 
cultivation, every waterfall harnessed, every 
oil-well discovered, every new railroad, fresh 
invention or patented device, adds to the grand 
total of men's power to work economically 
and efficiently; and as these results of human 
activity are multiplying in America more 
rapidly than in Europe, where millions of 
workingmen are ever under training to kill 
other workingmen, the differences indicated 
above are to become more and more in Ameri- 
ca's favour. In 1920 there will be one hun- 
dred and ten millions of Americans with a 
working power greater than that of the whole 
of Europe, with its three hundred and fifty 
millions. It is neither difficult nor unsafe to 



Introduction xvii 

prophesy concerning geometric progression, 
such as this is. 

To briefly indicate in one department of in- 
dustry how this mechanical superiority works, 
it can be shown that, in agriculture, the pro- 
duct per capita of the hands employed in 
America is 350 bushels of grain, as against 119 
in England, 98 in France, 75 in Germany, 64 
in Austria and 39 in Italy. In the production 
of meat America leads with 1,230 pounds per 
farm hand, as against 1,090 in England, 350 in 
France, 230 in Germany, the same in Austria, 
and 130 in Italy. In manufactures, of course, 
the contrast is much more striking. 

The greater efficiency of the American as a 
food-producer bears a direct relation to the 
continuance of his superiority; since good 
feeding produces good men, — men of fine in- 
telligence as well as fine physique; men of re- 
source and energy and big brains, as well as 
broad conceptions and high ideals. "God 
sifted a nation to find seed for this planting ;" 
and the selective process continues. Taking 
as we do, the most enterprising and ambitious 
men and women of every race, giving them 
the opportunity of securing food in kinds and 
quantities undreamed of in their old homes, 
and educating their peasant offspring side by 
side with the descendants of God's first sifting, 
it is no wonder that the second generation of 
Slavonic serfs and runt-like Italians come to 
acquire some outward aspect and inward 
force of the sons of Puritans. 



xviii The Trust: Its Book 

When the Pilgrim fathers landed, less than 
three hundred years ago, on the desolate shores 
of Massachusetts, their wealth consisted of 
such poor belongings as they had been able to 
stow into a vessel no bigger than a sloop yacht. 
When they had built their first house, their 
wealth was increased by the value of their 
labour on it. At this period, the nations of 
the old world had their cities, public buildings, 
roads and economic organizations, which had 
taken generations to build up and had cost in 
human effort more than can now be estimated. 
The American people are making such vast 
accumulations that a single decade now sees 
an addition to their wealth greater than the 
entire capital value of some of these old na- 
tions, who were so abundantly equipped when 
the founders of America had little beyond the 
clothes they wore. It is marvellous that the 
Republic should ever have doubled her popu- 
lation in twenty-five years; but she has quad- 
rupled her wealth during the same period. 
Within the memory of persons living her 
wealth has multiplied sixteenfold. In thirty 
years, from 1850 to 1880, its increase was 
greater than the entire wealth of the German 
Empire, with its farms, old-time cities, banks, 
shipping, manufactures, Krupp guns and mil- 
lions of conscripts. Her annual accumulation 
during this period was over 800 million dollars ; 
so that each decade added more to her wealth 
than the capital value of Italy or Spain. This 



Introduction xix 

is sufficiently startling, but it is nothing to 
what has been done since. America's present 
rate of accumulation reaches figures absolutely 
incomprehensible. Let us put it into thou- 
sands of millions, simply for comparison; for 
we cannot possibly grasp the meaning of such 
totals. In 1850 it was between 7 and 8. 
Twenty years later it was over 30. Ten years 
later it was over 42. In 1890 it was 65, and 
in 1900 it was 94. This simple statement is 
comprehensible provided we forget that each 
one of the units represents a thousand million 
dollars I To present the fact in another form, 
let us say that the present wealth of the United 
States, if divided, would give $1,235 to every 
individual, including babies, or about $5,000 
to every family in the land. This is four times 
as much per head as in 1850, when it was only 
$307. The increase in general comfort and 
well-being which these figures imply is not 
capable of statistical expression; but it can be 
seen in the comfortable homes of the people, 
in the well-stocked markets where they buy 
their food, in the shops where they get their 
clothes, in the schools where their children are 
educated by methods undreamt of a generation 
ago. It can be seen in the superior stature of 
the people, indicating better sanitation and 
more generous feeding during childhood. It 
is visible in the general use of books, in the 
great intelligence of the people and in the 
general air of prosperity seen even among the 



xx The Trust: Its Book 

humblest workers. That these workers have 
a large share in the general prosperity of the 
country is shown, in one way, by the fact that 
nearly three per cent, of the total wealth of 
the country is in savings banks. The exact 
sum in 1900 was $2,624,873,634 — an increase 
of nearly five hundred per cent, in thirty years. 
In England the increase of similar deposits 
during the same period was three hundred per 
cent. 

The surprising growth of America's working 
power and wealth, familiar perhaps to the stu- 
dent of economics, are not generally known either 
at home or abroad. They have been ob- 
scured by the phenomenal progress of American 
manufactures, and the recent successful in- 
vasion by American manufacturers of the 
markets of the world. They are, however, the 
underlying causes of that amazing exhibition 
which has given a shock to the oldest and most 
cherished traditions of Europe and which has 
long been foreseen in America. In 1900 Amer- 
ica's exports of domestic manufactures exceeded 
$433,000,000 in value. In 1886, when they 
amounted to less than one-third of this sum, 
I predicted, in a little book which had some 
circulation in England, the coming invasion, 
and asked : What will Europe give in exchange 
for American products ''when the Republic not 
only becomes self-sufficing, but sends her cheap 
manufactures into the neutral markets of the 
world? Already her exports are 31 per cent. 



Introduction xxi 

in excess of imports. This problem will get 
more difficult of solution as it grows old. 
America, favoured by great natural resources, 
and untrammelled by military taxation or ser- 
vice, free from war debts and from the burden 
of royalty and large classes of non-producers, 
will soon undersell the products of Europe in 
every market. This is the way in which the 
Western Republic will join the European con- 
cert. ... It may be visionary to specu- 
late how the other musicians will receive such an 
advent. To me only one result seems possi- 
ble: Europe will have to send her sons home 
from the barrack and camp, that in the forge 
and workshop they may take part in a strug- 
gle keener than that of Waterloo. The con- 
test will be industrial. Shuttles, picks and 
hammers will be the weapons. The victory 
like that of military encounters, will mean sur- 
vival to the fittest; but the fittest here is the 
one possessing the most efficient and economi- 
cal industrial system."* 

This would be the rational way of meeting 
American competition ; but, with their infatua- 
tion for direct remedies, the nations of the old 
world are agitating for increased " protective " 
tariffs. In Germany the effort has been suc- 
cessful, and duties on American products are to 
be largely increased. The inevitable conse- 
quences will be poorer food for the workers, 
dearer raw material for manufacturers, and a 

*" Uncle Sam at Home," pp. 239-240. 



xxii The Trust: Its Book 

further handicapping of German industry in" 
competition with America. In Austria a 
movement has been started for a European 
combination against America, which will prove 
abortive if attempted. In the old country 
the people are being roused by the cry : Wake 
up, England ! and protectionist petitions are 
being presented in Parliament. It will be 
found, however, that the only way in which 
American competition can be even partially 
met — it is beyond the power of any old-world 
nation to do more — is to adopt more economi- 
cal social as well as industrial methods, so as to 
assimilate them to those prevailing on this 
side. 

And while they are talking, America is going 
"right ahead." A comparison of the growth 
of our export trade with that of other nations 
shows that the United States in the last fiscal 
year (July, 1901) has made by far the greatest 
advance of any nation. During the year the 
increase of exports from the United States has 
averaged $9,000,000 a month; that of the 
United Kingdom, $3,000,000; Russia, $3,000,- 
000; France, $2,000,000; Canada, $2,000,000; 
Austria-Hungary, $1,000,000; Mexico, $1,000,- 
000; Germany a loss of $2,000,000 a month; 
Spain a similar loss, and Belgium a loss of 
$1,000,000 a month. In other words the 
increase of the Republic's exports was more 
than twice as great as that of the whole of 
Europe. 



Introduction xxiii 

While our sales to Europe have been in- 
creasing at a surprising rate, our purchases 
abroad have diminished to a degree fully justi- 
fying the foreign alarm. Our total imports 
of manufactures in 1900 amounted to less than 
we paid for foreign woollens and cottons in 
1880. For the last two years the balance of 
trade has been in our favour to the unexampled 
total of $1,313,000,000, while every European 
nation, with the single exception of Austria, 
has had balance of trade against it. During 
the last four years our balance of trade in 
manufactures alone amounted to more than 
the total balance of all trade since the founding 
of the Republic. 

This favourable trade balance is not limited 
to our commerce with Europe, however. It 
characterizes our dealings with nearly every 
part of the world. During the last decade we 
have reduced our imports from Europe from 
$474,000,000 to $439,000,000, while in the 
same time we have increased our exports from 
$682,000,000 to $1,111,000,000. From British 
North America imports fell from $151,000,000 
in 1890 to $131,000,000 in 1900, while exports 
increased from $95,000,000 to $202,000,000. 
The imports from South America, principally 
of raw material, increased but a million dollars, 
while our exports increased six times as much. 
From Africa, imports increased from $3,000,000 
in 1890 to $9,000,000 in 1900; while our ex- 
ports leaped from $4,500,000 to $22,000,000 



xxiv The Trust: Its Book 

during this period. So it is all over the world. 
Generally our dependence on other countries 
has been conspicuously reduced during the 
decade, while the nations have largely in- 
creased their demands for our products. 

This is a record of only ten years, despite the 
interruption of the war with Spain. " Veni, 
vidi, vinci" is surely the motto of the American 
manufacturer; for although the contest has 
only just begun, its final completeness is clearly 
indicated. The consular reports of our for- 
eign trade show that we are actually sending 
cutlery to Sheffield, iron to Birmingham, ship- 
plates to Glasgow, silks and shoes to Paris, 
beer to Germany, even maccaroni to Italy, 
and Spain is seriously asking herself if she may 
not expect to see American oranges offered 
in the markets of Valencia ! In a contest of a 
few years we have gained such victories that 
we are warned in an official publication of the 
State Department of "the possible conse- 
quences to our European trade of a rivalry on 
our part which may be so crushing as to greatly 
impair the purchasing power of those who are 
now our best customers. If we permanently 
cripple their chief industries," says Chief 
Emory, of the Bureau of Foreign Statistics, 
in his report to Secretary Hay, "we deprive 
them, to a greater or less extent, of the means 
of buying from us, and the consumption of our 
food supplies and our raw materials, as well as 
of our finished goods, may be greatly curtailed, " 



Introduction xxv 

And the warning is echoed by our consul to 
Berlin, Mr. Mason, who writes that Germany is, 
"after England, our best customer, and any- 
thing which checks the prosperity of her people 
will diminish to that extent their ability to 
maintain the reciprocal trade which is now so 
heavily in favour of the United States." 

Such utterances are interesting as illustra- 
tions of the completeness of the American 
manufacturers' victory; but as warnings they 
are valueless. There is a law of commercial 
gravity, by which products of all kinds flow 
to the best markets; and the conditions which 
make the best markets are too complex to be 
affected by academic opinions and prophecies, 
however wise and farsighted they may be. 
The cheapness and excellence of iVmerican 
goods are the factors governing their accept- 
ance in preference to others; and it is not 
probable that any of the European nations 
will be able to compete with America in econ- 
omy of manufacture. We have the raw 
material of most of our exports in unlimited 
abundance. Our coal-beds and ore deposits 
are of vast extent, and their product can be 
increased indefinitely as the markets demand, 
and every increase is accompanied by econo- 
mies. But in Europe this is not so. There 
conditions are reversed. Every known source 
of supply has been exploited to its fullest 
economical capacity, so that every increase 
of output must be accompanied by advance of 



xxvi The Trust: Its Book 

cost. In coal, this is notably the case, for 
owing to the great depth of many of the mines 
the output per worker is steadily diminishing 
with constantly increasing cost. In America, 
the tendency of prices has been downward for 
many years. 

Notwithstanding the vast distances which 
our raw materials must travel to reach the 
factory or the furnace, our systems of trans- 
portation are so complete that the charge 
for freighting has but an insignificant part 
in the final cost of the finished product. 
We can bring a ton of ore from the head 
of Lake Superior to the blast furance at 
Pittsburg for less than the Londoner pays 
for carrying his coal from the wharves 
into his cellar. Our freight rates are 
only one-quarter as much as in England. 
In thirty years the average rate per ton-mile 
dropped from 1.94 cents to 0.73; yet our rail- 
ways are prosperous and increasing their divi- 
dends, while those of England are annually 
falling behind. The increased expense of op- 
erating fifteen of the principal railways in 
England in 1900 as compared with the pre- 
vious year was a million and a quarter sterling, 
while the net receipts decreased by an even 
greater sum. In the same year the net earn- 
ings of American railroads was seventy-three 
million dollars more than in any previous 
year, and over twenty-seven and a half million 



Introduction xxvii 

dollars were paid in dividends more than ever 
before, while an even larger sum was carried 
forward. 

To summarize the results of a single genera- 
tion's activity, it may be stated that between 
1870 and 1900, America doubled her popula- 
tion, but her railway tonnage increased more 
than twice as fast, while her interlake traffic 
multiplied thirty-one times. While the pro- 
duction of wheat and corn just keep pace with 
the increase of her people, the domestic cotton 
used up in her own mills was trebled, and the 
coal product increased six-fold. Of petro- 
leum the output multiplied eleven times; of 
steel one hundred and fifty-three times. While 
her total exports increased 256 per cent., her 
exports of manufactures advanced 535 per cent. 
"Imports of all classes" decreased in ratio 
to population, but purchases abroad of some 
raw materials, like silk, were multiplied twenty- 
one times. The money in circulation in- 
creased twice as fast as the population. The 
wealth of the country was trebled, as was the 
total of deposits in national banks. While the 
production of gold and silver was doubled, that 
of pig-iron was multiplied thirteen times and of 
copper twenty-two times. Cotton was pro- 
duced, manufactured and exported nearly 
twice as fast as the growth of the population ; 
the expenditures on education increased in 
the same ratio; post office receipts moved half 
as fast again; telegrams increased seven-fold, 



xxviii The Trust: Its Book 

and the patents issued six-fold. In a long list 
of such facts the only ones exhibiting decreases 
were national indebtedness, cost of railway 
transportation, importations of foreign goods, 
and the vessels engaged in foreign trade. 

In a minor degree the processes which have 
wrought such great changes in America are 
operative in Europe. With us the movement 
has been especially rapid because of the great 
natural resources of our continent, the super- 
ior intelligence of our workmen due to the in- 
flux of generations of the more enterprising 
and progressive of Europeans, the adaptability 
fostered by a new country, and the mechani- 
cal ingenuity encouraged by the vast task of 
building a nation in the wilderness. But as 
these processes have a common origin, they 
must, in the main, move along similar evolu- 
tionary lines. A brief survey of the course of 
social and industrial development from primi- 
tive times not only reveals the community of 
origin and growth of the economic institutions 
of civilized communities, but indicates, with 
more or less distinctness, the lines along which 
future progress will probably run. 

The foundation of our social system was laid 
when, in primitive times, the struggle for ex- 
istence was welding fighting units into families, 
and families into clans. Its growth was pro- 
moted when these in turn combined with other 



Introduction xxix 

clans to oust a neighbouring tribe from a 
specially desirable pasturage, or to maintain 
their own particular valley against invaders. 
The simple tribal organization thus resulting 
was that which obtained among the North 
American Indians when the white man first 
appeared on this continent. It was also that 
which Julius Caesar found 'when he landed in 
Britain. The building of a nation out of such 
separate tribes was effected by the operation 
of the same great law — the struggle for exist- 
ence. War was the unifying power from the 
outset. It has continued so to be down to our 
own time. It savours of the paradox to say 
that the blessings of civilization are due to war ; 
but it is none the less a fact. Without social 
union there could be no civilization; without 
war there could have been no social union. 

The evolution of industrial institutions dis- 
plays the same general features. At first the 
individual was self-sufficing. Then as the 
complexity of life increased, his efforts were 
joined to those of neighbours: one made the 
arrows, another shot them. One woman gath- 
ered reeds and fibres; another wove them into 
baskets and nets. Later, a simple form of 
barter was set up with neighbouring clans or 
tribes. One had fish to trade for meat; and 
in the course of time some bead-like orna- 
ment was used as a measure of value, and lo ! 
money had been invented. Or perhaps a 
bed of salt was found within the tribal pre- 



xxx The Trust: Its Book 

cincts, and the community grew rich by ex- 
changing it for the desirable commodities of 
other tribes. In this way a rudimentary in- 
dustrial system was formed and fostered dur- 
ing the rare intervals of peace enjoyed by 
primitive communities. As the tribe grew 
more numerous or was affiliated by marriage 
and military alliances with neighbouring tribes, 
the process of industrial differentiation went 
on, until each community developed a spe- 
cialty. The Navajos made a blanket of great 
beauty and value. The Pomos wove baskets 
that would hold water. The Flatheads and 
Snakes cured salmon so that it would bear 
transportation a thousand miles. Obsidian 
arrow-heads have been traced hundreds of 
miles from any natural deposit of this mineral ; 
and wampum made from sea-shells has been 
found in the middle of the continent. While 
this tribal specialization was going on, a similar 
process was at work within the community 
itself; and families developed aptitudes which 
led to increasing varieties of products. Among 
peoples less given to war than the North Ameri- 
can Indians, the differentiation of workers was 
more rapid; and the relation of master and 
apprentice, of employer and employed, was es- 
tablished. Wages thus originated; and soon 
the workshop developed into the factory. 
And so by slow and gradual growth, from the 
simple to the complex, from the indefinite to the 
definite, from the homogeneous to the hetero- 



\ 



Introduction xxxi 

geneous — which are all terms of the law of 
evolution — the modern stage of industrialism 
common to all civilized communities has been 
reached. 

Up to this point the economic growth of 
society has undeviatingly followed evolution- 
ary lines. These, indeed, were the only lines 
open to it so long as it retained a progressive 
character, since growth, progress, and evolu- 
tion are synonymous. At times, during the dark 
ages, there have been temporary hindrances 
and even set-backs to the movement, as when 
the industrial systems of the Moors were de- 
stroyed in Spain; but, broadly speaking, there 
has been no break in the continuity of that 
advance from the simple, indefinite and inco- 
herent efforts of primitive men to supply their 
natural wants, to that complex, definite co- 
herency which marks modern methods of 
meeting the same natural needs. 

The nature of the growth of industrialism 
from its simple beginnings to its present com- 
plex stage, can thus be explained and defined 
in exact terms by the law of evolution. Can 
this law do more? Can it indicate with any 
approach to certainty the lines of further pro- 
gression ? Let us see. 

There is a term in the complete definition of 
the law of evolution which has not been ad- 
verted to. As a factor in the growth of society 
it is not so conspicuous as some others, that of 
increasing definiteness, for example. It is 



xxxii The Trust: Its Book 

nevertheless clearly traceable in the past 
development of industrialism. It is becoming 
increasingly noticeable in the tendencies now 
visibly operative, especially in American eco- 
nomic developments. This final term is that 
of the ''concomitant dissipation of motion. " 
Translated into everyday phraseology, this 
means a diminishing waste of energy, a less 
frequent slipping of cogs, the avoidance of 
needless multiplication of activities. And here 
is where the centralization of capital, the 
decay of destructive competition, the protec- 
tive combination of all the factors of produc- 
tion, are shown to have their place in the great 
chain which links us to the past. Here is 
where co-operation arises with its attendant 
economies, to complete and round off the great 
natural development which has taken us thou- 
sands of years to reach. The " concomitant 
dissipation of motion" stands conspicuously 
out of every one of the following essays, though 
it is doubtful if all the great men of action 
who wrote them fully recognized it as part of 
the great natural law underlying the social 
phenomena they describe. This, indeed, is 
the characteristic of natural laws: recognized 
or ignored, they never cease to be operative, nor 
can they be repealed by Congress or vetoed by 
President. 

Here, then, we get an indication of the lines 
along which future economic development will 
take place. The movement towards co-opera- 



Introduction xxxiii 

tion, towards the elimination of unintelligent 
competition, towards the peaceful alliance of 
labour, capital and brains, towards the in- 
creasing centralization of industries, which is 
the most pronounced characteristic of Ameri- 
can civil life, — this movement, being in har- 
mony with the laws underlying all progress, is 
destined to extend until it covers the whole 
industrial world, or until it merges into some 
new and better phase of social evolution. Thus 
the old hated "Trust, " the immediate fore- 
runner of the present "Merger," receives the 
benediction of Nature herself, the sanction of 
the very laws of life. We are astride of a 
tendency which, originating in the barbaric 
past, is giving us the promise of a fuller and 
more complete national life than the world has 
ever seen. In the broad perspective of history, 
illuminated by the light of evolutionary law, 
we are able to see that this tendency is not the 
creation of self-seeking capitalists, aiming to 
corrupt our moral and political life, and under- 
mining the very foundations of society by 
destroying competition and competitors. 
Neither is it a mere hobby-horse from which 
we can descend at the bidding of legislators. 
It is a wholesome, irresistible, natural pro- 
gression from lower forms of industrial life to 
higher ones. It is a phase of economic evolu- 
tion having its roots at the gates of Eden, con- 
trolled by laws as regular as those which 
mould the falling raindrop. When St. Paul 



xxxiv The Trust: Its Book 

wrote, "Whatsoever is, is good," he thereby 
voiced not only the desirability of what we 
call progress, but the inevitableness of it. 
And this is what we need to emphasize: the 
inevitableness of it. 

Reduced to its simplest expression, the 
struggle for existence, or, in other words, the 
law of competition, has been the natural force 
underlying industrial development. We are 
often told that this struggle for existence has 
only changed its outward shape: that in es- 
sence it must ever remain that which our 
forefathers knew when they fought with tooth 
and nail in defence of their cave home or the 
hard-won trophies of the chase. Is this true? 
Is the law of competition Nature's first and 
last word to her children? Is humanity 
destined for ever to struggle with itself? Is 
this Nature, "red in tooth and claw," in- 
capable of modification and improvement? 
Is success never to be dissociated from battle 
and victory? Is it contrary to the nature of 
things that men cannot live except by conquest 
of others? We think not. The ingenuity of 
man and his dominion over the forces of nature 
are great enough, now-a-days, to ensure to 
every civilized being both subsistence and 
comfort. It only remains to so apportion the 
daily yield of our common mother-earth as to 
secure the easy existence of every unit of our 
nation; and the problem is by no means in- 



Introduction xxxv 

capable of solution when we have transferred 
our energies from mutual competition to uni- 
versal co-operation. As militancy first com- 
pelled national unity, so the warring factions 
of industrialism are being forced into protec- 
tive alliances. This is the purport of the 
latest phase of social evolution. If under 
modern conditions fifty men can feed a thou- 
sand and another fifty can clothe them, the 
struggle for existence has ceased; there should 
now be enough peaceful leisure for all to develop 
the best that is in them. Nor need we await 
the coming of some Messiah to teach us how 
to divide the results of human activity so as to 
subserve the best interests of the nation. 
Nature herself is showing us, by leading us 
out of the strife of competition into the paths 
of peaceful co-operation. Under a rational 
industrialism, of which the yet imperfect at- 
tempts at centralization are the beginning, 
we are to pass from the cruel egoism of old 
systems to the kindly altruism of the new. 

This is not mere sentimentality; it is the 
logical outcome of forces always at work within 
and around us. Just as there has come a time 
when, on this continent at least, war has given 
all of good that it has to give, so is there coming 
a time when competition — which is industrial 
war — will have conferred on the nation all its 
possible benefits. A perfected system of co- 
operation is the promise to civilized mankind 
of existing tendencies. The defects due to in- 



xxxvi The Trust: Its Book 

complete evolution will soon cease to obscure 
the progressive and beneficial character of the 
movement. The evils which have discredited 
it and provoked hostility, the over capitaliza- 
tions, stock jobbings and underhand business 
methods sometimes accompanying the change, 
are but accidental survivals of the lower in- 
dustrial life, and are in no sense either perma- 
nent or inevitable features of the higher one 
towards which we are rapidly moving. It is 
to these intruding remnants of a passing con- 
dition that legislative restraint should be 
directed, and strictly limited. 

To the nations of the old world the special 
portent of the new industrialism is not less 
significant. To the student there is a deeper 
meaning than appears on the surface in the 
disquieting apparition of American manufac- 
tures in Europe. The commercial invasion, 
just begun, is destined to bring about a com- 
plete revolution of existing economic and 
social theories and practices. This revolution 
will be more comprehensive than anything 
that has preceded it in time. It involves a 
complete revision of social ideals. It means 
the final abandonment of the military regime 
in favour of an industrial system in which per- 
sonal liberty will receive a new and wider 
meaning. It means the substitution of federal- 
ism for feudalism; the relegation of inherited 
privilege to the "scrap-heap," with other 






Introduction xxxvii 

worn-out machinery of the past. Every labour- 
saving device which gives the American manu- 
facturer an advantage over his adversaries — 
for the contest is keen enough to justify the 
use of militant terms — has a political meaning, 
hidden maybe to the man who operates it, 
but nevertheless plainly visible to the intelligent 
onlooker. The hum of machinery in New 
England and the clatter of Pennsylvania 
workshops are becoming more eloquent of 
peace than the rescript of the Czar of all the 
Russias. We are forcing mankind to recog- 
nize that even such a prosaic thing as a potato- 
peeling machine, may carry a text into homes 
closed to printed books. The whirr of an 
American reaping machine, heard by peasants 
in the fields of Central Russia, may teach a 
lesson where Rousseau and Victor Hugo would 
never be heard, nor understood if heard. This 
is the only true and worthy triumph of our 
industrial supremacy. In itself, there is noth- 
ing ennobling in the underselling of competitors. 
The successful warrior, waving aloft the gory 
scalp-lock of his enemy, enjoyed the same 
sense of triumph. But if the contest sug- 
gests a new thought concerning the rights of 
man, the world is the better for it. If by 
commercial stress the peoples of the old world 
are forced home from the barrack and camp 
into the forge and workshop, then the indus- 
trial supremacy of America unconsciously 
takes on an aspect of beneficence. If by in- 



xxxviii The Trust: Its Book 

vading the world's markets, we can bring about 
the abolition of militancy, our mechanical 
superiority receives a new and nobler meaning. 
That the social as well as the economic systems 
of the world are being profoundly affected by 
American industrialism brought into the homes 
of the people of every land, is obvious to all 
who keep in touch with this latest expression 
of Americanism. "Liberty enlightening the 
world, " is more than a gigantic toy. It is the 
true symbol of our mission to mankind; and 
every ship that passes through its great shadow, 
freighted with our products, is a white-winged 
messenger of peace to the armed camps of 
Europe. Let our national exultation be over 
this, rather than over the defeat of rivals. 



THE TRUST: ITS BOOK 

CHAPTER I 

COMBINATIONS AND CRITICS 

Charles R. Flint 

The time has come when indiscriminate 
criticism of industrial combinations should be 
condemned. They have been compared to 
"corners" in food products, or in stocks or 
other investment securities, and yet they are 
the direct opposite of such "corners." "Cor- 
ners" produce nothing. The end they bring 
about is absorption and stagnation. They 
have, without justification, been compared to 
monopolies with all their attendant evils. It 
should be borne in mind that the "habit of 
supposing extreme cases, and then of reasoning 
from them, is the constant refuge of those who 
are obliged to defend a cause which, upon its 
merits, is indefensible." In the main only 
such arguments have been used by the oppo- 
nents of these combinations. 

While conceding that some of the alleged 
disadvantages may exist, it can be shown that, 
for the most part, they are imaginary or theo- 
retical, while the advantages are real and sub- 
stantial, and of sufficient importance wholly 



2 The Trust: Its Book 

to overshadow the disadvantages, and to justify 
us, as employers of labour, as men with money 
invested in manufacture, and as citizens of 
the Republic, in advocating these combina- 
tions by voice and act until there shall be 
established concerning them a healthy public 
opinion, instead of the spurious article which 
some men and newspapers would put into 
circulation. 

The truth is that such combinations are the 
evolution of our manufacturing industries, and 
the advantages arising from them are similar 
to those which resulted from the original in- 
troduction of manufacture into this country. 
They represent the highest development of 
manufacturing, as do extended railway sys- 
tems of transportation on land, the ocean grey- 
hound of transportation on the sea, the national 
banking system of exchange, the telegraph and 
telephone systems of communication. 

Every American citizen is interested in the 
discussion and right solution of these questions, 
for, as Daniel Webster has said/' The manu- 
facturing interest is a general, and not a local 
interest;" and in considering the causes which 
might operate to limit the growth and ex- 
pansion of manufacture, he used these words: 

"Who, standing here, looking around on this commu- 
nity and its interests, would be bold enough to touch 
the spring which moves so much industry and produces 
so much happiness? Who would shut up the mouths 
pf these vast coal pits ? Who would stay the cargoes of 



Combinations and Critics 3 

manufactured goods now floating down a river, one of 
the noblest in the world, stretching through territories 
almost boundless in extent and unequalled in fertility? 
Who would quench the fires of so many steam engines 
and check the operation of so much well-employed 
labour?" 

Compare that view, — broad, statesmanlike, 
comprehensive,— with the expression of the 
French philosopher: 

"The machines designed to abridge art are not always 
useful. When a piece of workmanship is of a moderate 
price, equally agreeable to the maker and buyer, those 
machines which would render the manufacture more 
simple, or, in other words, diminish the number of work- 
men, would be pernicious. And if water-mills were not 
everywhere established, I should not have believed them 
so useful as is pretended, because they have deprived an 
infinite multitude of their employment, a vast number 
of persons from the use of water, and a great part of the 
land of its fertility." 

These two views are to-day variously dressed 
and presented ; but, when stripped of verbiage, 
the arguments for and against manufacturing 
extension, resolve themselves substantially into 
the opinions quoted. No one can doubt which 
represents true enlightenment and the best 
interest of the American Commonwealth. 

In every age there have been those who have 
set their faces against innovation. No marked 
progress has been made in science, and no new 
movement of reform has successfully established 
itself in public favour, until opposition has 
been overcome. 



4 The Trust: Its Book 

Macaulay, in his reference to the introduc- 
tion of the stage coach in England, says : 

"This mode of travelling, which by Englishmen of the 
present day would be regarded as insufferably slow, 
seemed to our ancestors wonderfully and alarmingly 
rapid. In a work published a few months before the 
death of Charles II., the English coaches are extolled as 
very superior to any similar vehicles ever known to the 
world. Their facility is the subject of special discussion 
and is favourably contrasted with the sluggish pace of 
the Continental Post. But with boasts like these was 
mingled the sound of complaint and invective. The 
interests of a large class had been unfavourably affected 
by the establishment of the new diligence, and, as usual, 
many persons from mere stupidity and obstinacy were 
disposed to clamour against the innovation simply be- 
cause it was an innovation. It was vehemently argued 
that this mode of conveyance would be fatal to the breed- 
ing of horses and to the noble art of horsemanship; that 
the Thames, which had long been an important nursery 
of seamen, would cease to be the chief thoroughfare from 
London up to Windsor and down to Gravesend; that 
saddlers and spurriers would be ruined by hundreds; 
that numerous inns at which mounted travellers had been 
in the habit of stopping, would be deserted and would 
no longer pay any rent; that the new carriages were too hot 
in summer and too cold in winter; that the passengers 
were grievously annoyed by invalids and crying children; 
that the coach sometimes reached the inn so late that 
it was impossible to get supper, and sometimes started 
so early that it was impossible to get breakfast. On 
these grounds it was gravely recommended that no public 
coach should be permitted to have more than four horses, 
to start oftener than once a week, or to go more than 
thirty miles a day. It was hoped that if this regulation 
were adopted, all except the sick and lame, would return 
to the old mode of travelling. Petitions embodying such 



Combinations and Critics 5 

opinions as these were presented to the King and Counsel 
from several companies of the City of London, from 
several provincial towns and from the justices of several 
counties. We smile at these things. It is not impossible 
that our descendants when they read the history of the opposi- 
tion offered by cupidity and prejudice to the improvements 
of the Nineteenth Century, may smile in their turn." 

No passage from history could better illus- 
trate the character of the present outcry of 
some newspapers and of some men, against 
the consolidation of manufacturing intelligence 
and capital. These industrial combinations 
have arisen naturally enough if you seek for 
their origin. A man who, by intelligence and 
constant application, has built up a successful 
manufacturing business, has frequently an 
income-producing property which can not be 
transmitted to his heirs. He has only a life 
interest in the business, and often such a prop- 
erty, successful during the lifetime of its founder, 
has disintegrated on his death, or even when 
old age and infirmity have overtaken him. 
Now an opportunity is afforded to the founder 
to consolidate his establishment with similar 
institutions, so that it will be a part of a great 
combination, in which no one man is an es- 
sential factor. He is able to dispose in whole 
or in part of his distributive share in this 
organization, through the market such large 
corporations create for their securities, which 
yielding on the average a larger return than 
bonds or railroad stocks, are therefore more 
attractive to investors, Or if he has retained 



6 The Trust: Its Book 

the securities he has received, his estate under 
such circumstances is easily distributed. In- 
stead of there being a partition of an isolated 
property of uncertain value or duration, the 
interests to be divided represent a part of a 
great whole. 

The absorption of one manufacturing in- 
dustry by another, or a combination or con- 
solidation of the two, means not alone the 
aggregation of mere wealth — that is not so 
important; it means the aggregation of in- 
tellect, reduction of expenses, the production 
of a better article, larger distribution, and 
larger profits to the new organization without 
increased cost to the consumer. It means a 
larger field for usefulness, for capital and 
labour. 

The labouring masses have often opposed 
the introduction of labour-saving appliances; 
but time has shown that such inventions have 
benefited the poor more than the rich. The 
agricultural and other machinery in this coun- 
try is equivalent to the combined effort of a 
population of over 400,000,000; its benefits 
are distributed among the 80,000,000 of our 
population, and the people of the United States 
are enjoying greater luxuries than did the 
nobility in ages past. Each consumer has 
the equivalent of five persons labouring for 
, his support. 

While large fortunes have been made by 
industrial developments, by the extension of 



Combinations and Critics 7 

transportation by railroad and by ocean steam- 
ships, these large fortunes, often malevolently 
and unwisely criticised, are insignificant when 
compared with the accompanying benefits 
which have been distributed to the general 
public. The development of these enterprises 
has enabled the farmer to harvest and trans- 
port his products at better prices than before, 
and has brought him in touch with the markets 
of the world. The manufacturing industry 
has strengthened the resources of nations. 
Through it the North was made richer than the 
South, and triumphed in the end. It has 
enabled Germany to-day to be the dictator of 
the peace of Europe. It has made England 
the mistress of the seas. If the wise words of 
one of our great statesmen had been heeded, 
the development of manufacturing interests 
in the South would have removed, to a great 
extent, the dangers of sectional differences 
which threatened our Union and gave rise to 
the war of the Rebellion. 

In the material progress of this generation, 
the greatest in the history of the world, the 
evolution of manufacture stands forth con- 
spicuous and pre-eminent. There are many 
among us who can remember the tallow dip, the 
spinning wheel, the hand loom, the clothes of 
homespun. The tallow dip was replaced by 
sperm oil ; whalers nourished, and New Bedford 
became a city of great wealth. Then capital 
and intelligence centred in the industry of 



8 The Trust: Its Book 

producing, transporting and refining petroleum ; 
and artificial light was put at a price which 
made the homes of the poor as bright as those 
of the rich. Later, gas was introduced. Now 
the electric light has turned night into day in 
the streets of all the important towns in this 
country; and our police records show a direct 
and most important result, if not on morals, at 
least on the better protection of life and prop- 
erty. Where the spinning wheel was running 
on a single yarn not many years ago, one hand 
is to-day making by machinery a thousand 
yarns, and cotton cloth has been sold for less 
than three cents per yard. The farmer who was 
then capable of tilling a few acres, to-day, as the 
intelligent director of a machine, harvests the 
produce of a thousand acres. These are but a 
few illustrations where, if time permitted, 
hundreds might be cited. 

If natural conditions be undisturbed, in- 
dustrial progress will continue. Put legal re- 
straint upon it, and sooner than any of us 
realize, the wheels which have been driving all 
this vast machinery will come to rest. Few 
people appreciate how much of a problem suc- 
cessful manufacture is. In no other business 
are such sleepless watchfulness and tireless 
attention required. If the manager is able to 
make ends meet, it is well — there is at the 
present day often a deficit — while a profit is 
evidence of the highest manufacturing aptitude. 
If we tax manufacturing interests indiscreetly, 



Combinations and Critics 9 

or otherwise deal unwisely with them, they 
will not recover from the injury until the re- 
straint is removed and natural conditions 
again prevail. The State deems it unwise to 
limit the accumulation of capital, the owner- 
ship of lands or personal property; so should 
public sentiment and public law leave un- 
trammelled the development of the manufac- 
turing industry. 3 

The consolidation of manufacturing interests 
ensures cheaper production through the division 
of labour and the bringing of them under 
one control means continuous production. 
There is nothing so harmful both to capital 
and labour, as spasmodic manufacture. If 
a factory run one week, and if it be un- 
certain whether or not it will run the 
next week; if it run one day and shut 
down the next, the interference with economy 
and the harmful influence upon the workman 
and capitalist are readily appreciated by 
those conversant with such demoralization. 

Our system of protection, not extravagant 
for a nascent industry, but frequently too great 
for a developed one, has, notwithstanding its 
wonderful benefits, been in some industries 
productive of excessive investment and ex- 
cessive manufacture. The result is that com- 
petition, instead of being the life of trade, has 
in many instances been the death of trade. 
While there are manufacturers, especially those 
catering to the wants of the rich, who hold to a 



io The Trust: Its Book 

high standard of quality, severe competition 
as a general rule forces manufacturers, no 
matter what their inclination may be, to adopt 
the policy of deceit as a matter of self-preserva- 
tion. Goods are not made with a single eye 
to their intrinsic merit for wear, but for sale. 
Competition has forced business far beyond 
the conservative limits of the capital invested, 
endangering not only the interests of stock- 
holders and of investors, but of creditors, and 
of whole districts dependent upon the success 
of a manufacturing industry. By combination 
an opportunity is offered to correct these 
abuses, and to advance manufacture to a per- 
fection it has never reached. To say that it 
shall not be availed of, is to declare that this 
development shall come to an end ; and when 
development ceases, decay and disintegration 
will have set in. There is no middle course. I 
should prefer to see every article that is manu- 
factured in Great Britain, France and Italy, 
brought into this country free of duty, than 
that we should assume to dictate what agencies 
manufacturing industries shall employ in their 
development, so long as they keep within the 
letter and spirit of that higher law which says- 
due regard being had to the conditions of life — 
that you shall so use your own as not to injure 
another. We cannot without the possibility 
of universal disaster, or the certainty of wide 
injurious result, touch the spring which is 
moving so much industry. 



Combinations and Critics ii 

The advantages of these combinations are 
precisely the advantages which came from the 
original introduction of manufacture into this 
country. No one has classified them so com- 
pletely as Alexander Hamilton. 

i . The division of labour. 

2. An extension of the use of machinery. 

3. Additional employment to classes of the community 
not ordinarily in the business. 

4. The promotion of emigration from foreign coun- 
tries. 

5. The furnishing of greater scope for the diversity of 
talents and disposition which discriminates such from 
each other. 

6. The affording a more ample and various field for 
enterprise. 

7. The creating in some instances a new, and securing 
in all a more certain and steady demand for the surplus 
product of the soil. 

All these advantages are equally characteris- 
tic of these combinations. 

And now what are the alleged disadvantages 
of these combinations ? Among other things 
it is claimed that they result in monopolies. 

This objection is wholly imaginary. We 
have, under our laws, no monopoly, as the 
word is properly to be understood. We have 
quasi monopolies; that is, monopolies not by 
the terms of the grant, but by reason of the 
thing granted. Every grant to a railroad 
company, particularly to a horse-car railroad 
company, to a turnpike company, to a gas 
company, to a telegraph or telephone company, 



12 The Trust: Its Book 

is, in a sense, a monopoly. Monopolies to 
manufacture and trade have survived, to an 
extent, in the grant made by the Government 
under patents. These are really monopolies 
for a limited period, though they are justified 
by the advantage to the public resulting from 
the disclosure of a secret, after the exclusive 
enjoyment by the patentee. A premium is 
put upon invention for the common good, the 
full benefit of which is only postponed. In no 
sense, real or apparent, are these combinations 
monopolies. 

But the claim is made that they have all the 
inherent objections of monopolies; that they 
bring about all their evils, which, a legal friend 
has pointed out to me, were set forth in an 
early English legislation to be: " (i) The rais- 
ing of prices; (2) the commodity will not be so 
good; (3) the impoverishing of the poor artifi- 
cers. " 

I deny that such results flow from these 
combinations. Precisely similar objections 
were made to the introduction, as are now di- 
rected against the extension, of manufacturing 
industry. Hamilton has answered the original 
as I would have the present objections answered, 
by an appeal to experience. 

Said he: 

"There remains to be noticed an objection to the en- 
couragement of manufactures, of a nature different from 
those which question the probability of success. This 
is derived from its supposed tendency to give a monopoly 



Combinations and Critics 13 

of advantages to particular classes, at the expense of the 
rest of the community, who, it is affirmed, would be able 
to procure the requisite supplies of manufactured articles 
on better terms from foreigners than from our own 
citizens; and who, it is alleged, are reduced to the necessity 
of paying an enhanced price for whatever they want, by 
every measure which obstructs the free competition of 
foreign commodities. 

"It is not an unreasonable supposition, that measures 
which serve to abridge the free competition of foreign 
articles have a tendency to occasion an enhancement of 
prices; and it is not to be denied that such is the effeet, 
in a number of cases; but the fact does not uniformly 
correspond with the theory. A reduction of prices has, 
in several instances, immediately succeeded the estab- 
lishment of a domestic manufacture. Whether it be 
that foreign manufacturers endeavour to supplant, by 
underselling, our own, or whatever else be the cause, the 
effect has been such as is stated, and the reverse of what 
might have been expected. 

"But, though it were true that the immediate and 
certain effect of regulations controlling the competition of 
foreign with domestic fabrics, was an increase of price, 
it is universally true that the contrary is the effect with every 
successful manufacture. " 

I deny that these combinations find it to 
their interest to charge higher prices for their 
products. Let me give an illustration drawn 
from my own experience. 

The control of a company in which I am still 
interested, which manufactures an article in 
general use, was purchased by persons inter- 
ested in the Standard Oil Company, and three 
of its Executive Committee entered the Board 
of Directors. I was much interested to see 
what policy they would pursue in the conduct 



14 The Trust: Its Book 

of the business. We had been depending on 
the protection of trade-marks and patents, 
and had been selling our goods at a correspond- 
ingly high figure. To the surprise of some of 
my former associates, the policy of the com- 
mittee was to reduce the price thirty per cent. 
The profits dropped from eighty per cent, on 
the original cash investment, to less than ten 
per. cent. But owing to the improvement of 
the article and its cheapness, the consumption 
was doubled. The manufacturing facilities 
were correspondingly enlarged and improved; 
and although little or no money was made at 
first, at the end of two years the business so 
increased that the profits were not only larger 
than before, but the business was put upon a 
basis to insure its continued and permanent 
success. Its good-will lay thereafter, not in 
the monopoly which patents and trade-marks 
had insured to it under the law, but in the 
monopoly which comes through the sale of the 
best article at the smallest possible cost. The 
consumers and the shareholders were in the 
end equally benefited. Let me give another 
illustration. 

The Legislature of the State of New York 
passed a bill reducing the fares of the Man- 
hattan Railway Company from ten cents to 
five cents. Governor Cleveland vetoed the 
bill. I wish to call your attention to his mes- 
sage, and to the subsequent course of the Rail- 
way Company, for they illustrate how invested 



Combinations and Critics 15 

capital should be treated, and the intelligent 
appreciation by a corporation of its best in- 
terests. Said Mr. Cleveland: — 

"It is manifestly important that invested capital 
should be protected, and that its necessity and usefulness 
in the development of enterprises valuable to the people 
should be recognized by conservative conduct on the 
part of the State government. 

"But we have specially in our keeping the honour and 
good faith of a great State, and we should see to it that 
no suspicion attaches, through any act of ours, to the 
fair fame of the Commonwealth. The State should not 
only be strictly just, but scrupulously fair, and in its 
relations to the citizen every legal and moral obligation 
should be recognized. This can only be done by legislating 
without vindictiveness or prejudice, and with a firm 
determination to deal justly and fairly with those from 
whom we exact obedience. 

" I am not unmindful of the fact that this bill originated 
in response to the demand of a large portion of the people of 
New York for cheaper rates of fare between their places 
of employment and their homes, and I realize fully the 
desirability of securing to them all the privileges possible; 
but the experience of other States teaches that we must 
keep within the limits of law and good faith, lest in the 
end we bring upon the very people whom we seek to 
benefit and protect, a hardship which must surely follow 
when these limits are ignored." 

Now mark the result. The Manhattan 
Railway Company occupied, in the City of New 
York, the only streets available for rapid transit. 
It feared no competitor. It was not menaced 
by legislation. And although it continued to 
charge, for a short time, ten cent fares, it after- 
wards voluntarily reduced its fares to five cents ; 



16 The Trust: Its Book 

not on account of coercion, nor because it 
feared a rival ; for coercion had been unsuccess- 
ful, and rivalry there could be none; but vol- 
untarily, because it knew that this was the 
best way to serve not only the community, 
but its own interests. And notwithstanding 
the reduction, the income of the Manhattan 
Railway Company was larger than ever be- 
fore. What is true of this company can be 
said of many other corporate institutions. 

Has any one been injured by the consolida- 
tion of gas and electric light companies? 
There is scarcely a large city in the Union to-day 
which has not a large consolidated street rail- 
way or gas company. Do you have occasion, 
more than formerly, to complain of their rates 
or operation? Has the telegraph service been 
any less efficient since the Western Union 
Telegraph Company absorbed its rivals ? 

It is theorizing, which experience shows to 
be incorrect, to say that these large corporations 
find it to their interest to raise prices, any more 
than that they fall short of that high character 
of service which ensures public support. Prices 
may be fixed somewhat higher than the "war" 
prices prevailing during ruinous cut-throat 
competition, but the average price is lowered. 

If a combination in the possession of a large 
portion of a field does raise prices, the result 
inevitably follows that it invites against itself 
that destructive competition which originally 
made the combination necessary. It may be 



Combinations and Critics 17 

that some combinations will act thus unwisely ; 
but generally they are in the hands of people 
above such folly; and, if not above it, the 
management must be changed and another 
policy adopted, or disaster is sure. If, how- 
ever, as is unlikely, these combinations de- 
liberately use their power to enhance prices, 
and from ill-will and malevolence injure rivals 
and crush competition, then the tariff should 
be reduced and the conditions for such abuse 
be abated. 

Again, it is said, that such combinations, 
like real monopolies, cheapen the quality of 
the product. Again I appeal from theoretic 
deduction to actual experience. Such com- 
binations have or fear competition; or, if this 
be not so, they know full well that they are the 
objects of close scrutiny and that just as the en- 
hancement of price invites competition, or 
the finding by the public of some substitute, 
or the decrease of the protection afforded by 
our laws, so also the lowering of the quality 
means, in the end, less consumption. And in 
these days manufacturing success depends 
upon the largest production with the smallest 
amount of return consistent with investment. 
Large quick sales and small profits is the watch- 
word of these combinations. If you can look 
for nothing else from superior intelligence, you 
can at least depend upon its enlightened 
selfishness. 

A consolidated gas company finding itself 



18 The Trust: Its Book 

in the temporary possession of a territory — 
for it will be temporary only if it fall short of 
its duty — proceeds to do all in its power to 
make that occupation permanent. The con- 
solidation has brought about reduction of 
expenses; the manufacture is carried on at the 
best-located point — it is centralized. Know- 
ing that during good conduct it will have a 
reasonably secure future, the company re- 
models its works and invites consumption, not 
only by a cheaper but by a better product; it 
makes the public indirectly a partner in the 
new order of things. 

The New York Central Railway represents 
the original organizations of a dozen railroads. 
They have been absorbed, or they have united. 
Is the service less good, is the fare higher than 
before ? Does it not, like all common carriers, 
invite travel by commutation at rates less than 
those it is authorized to charge by law ? Does 
it not do whatever lies in its power to build up 
and make prosperous the locality through 
which it runs? Yes, and it does this not be- 
cause it fears competition, but because only 
in this way will its prosperity be permanent. 

Take a railroad which has no rivals. In the 
end there is no distinction between it and one 
of two competing systems as to rates of fare, 
or character of service and equipment. The 
managers need no such stimulus as competition. 
The operations of common-carriers almost in- 
variably show this. Ferry companies, in re- 



Combinations and Critics 19 

placing old equipment, secure it of a higher 
class than that discarded, though they are 
enjoying a quasi monopoly. Your oil is better 
refined to-day than ever, and is cheaper. 
What I have said is true of all industrial en- 
terprises in combination. I need not repeat 
instances. But the reverse is nearly always 
true of isolated competing concerns. The 
public does not seem to realize that the effort 
of these combinations is not so much to divert 
an existing demand as it is to create a new one. 

On the other hand a horde of small concerns 
are struggling for existence. Our tariff legis- 
lation has manufactured industrial enterprises, 
so rapidly have they risen. Until fierce com- 
petition began there were large profits. Then 
as profits became less, the inexperienced mush- 
room-concerns, not being able to compete 
fairly and honestly with the more capable, 
have met this higher intelligence by deception. 
Goods have deteriorated. They are made, as 
I have said before, to sell. There has been no 
attempt to create new avenues of output by a 
better article, made at lower cost with better 
machinery. A shoddy, flash article is offered 
to the public ; intelligence, yes, business honour 
has yielded in the struggle. To-day the plant 
of many of these concerns is antiquated ; and 
with the existing appliances deceptive goods 
are made with difficulty at a price at which 
with approved machinery, the best can be pro- 
duced. You might as well expect a man to 



20 The Trust: Its Book 

stop in battle to make himself a little more 
presentable to the spectator, as to hope for 
an improvement in quality of product under 
such circumstances. 

The beneficial results of extreme rivalry or 
competition are very much exaggerated even 
by highly intelligent people. Let me give an 
illustration quite outside of industrial enter- 
prises. 

We have in this country hundreds of insti- 
tutions of learning. England has two or three 
consolidated ones, if I may so speak. Do 
we in this country offer a better opportunity 
for education and culture than England ? Do 
we offer as good? In the City of New York 
there are several colleges and schools of medi- 
cine, and of law. Do you suppose that the 
graduates are better equipped as physicians, or 
better educated lawyers, because there is more 
than one of these professional schools? I am 
told not, and my observation leads me to agree 
with what I am told. It is what I should sup- 
pose the competition for precedence, or what 
the public so often confound with precedence, 
namely, popularity, leads to — unconsciously 
perhaps, but it leads there nevertheless — the 
relaxation by faculties and councils of the rigour 
of intellectual training. In the determination 
not to be the last in the race as to number of 
graduates, each of these institutions to-day 
distributes diplomas to students who, in one 



Combinations and Critics 21 

great institution, might fail through lack of 
merit and acquirements. What is true of the 
professional law schools is true of the schools 
of academic instruction. Do you suppose the 
scholarship of England would be higher to-day 
if she maintained fifty institutions of learning ? 
We do not need argument to convince us that 
this would not be so. We have experience to 
guide us. Let me draw one more illustration 
from experience. 

In the city of London there were a large num- 
ber of competing gas companies, when, about 
i860, Parliament passed a law granting to a 
few companies what was really a limited mo- 
nopoly. I quote from an English work which 
discusses the benefits of this legislation : 

"It was long and most strenuously contended that the 
only means by which cheapness and efficiency could be 
secured was by competition between companies established 
under parliamentary sanctions, and that the rivalry 
created, by having more than one company to supply the 
same area, would ensure the desired ends. This competi- 
tion has almost entirely ceased to exist. It necessitated 
the creation of two or more capitals and the maintenance 
of separate staffs of directors and other paid officials and 
servants, besides duplicating the constantly recurring 
disturbance of the public thoroughfares, owing to works 
necessary for the laying and maintenance of pipes and other 
machinery in connection with the supply. Instead of 
economy, therefore, it inevitably happened that neither 
the companies nor the consumers were benefited; and 
both gas and water were supplied under the most dis- 
advantageous conditions. The company which could 
carry on the struggle the longest eventually bought up 
its competitor or competitors, and thus placed itself in 



22 The Trust: Its Book 

the most favourable position to benefit others, at the 
same time securing its own prosperity. Experience in 
the conduct of these companies has amply demonstrated 
the fact, that in order to ensure prosperity there should 
be no diversity of interest between those serving and 
served. Previously to the year i860 there existed in 
London no less than thirteen gas companies, all with large 
capitals, separate and expensive staffs of officers and 
servants, and with pipes interlacing each other in every 
public thoroughfare. The price of gas was high and the 
companies in all cases realized but small returns in the 
way of dividends on their respective capitals. In that 
year a bill introduced to coerce these companies was 
abandoned by its promoters, and subsequently adopted 
and carried through by the gas companies. By the Act 
of i860 the metropolis was so parcelled out that the Lon- 
don companies were enabled by agreement between them- 
selves to assign a district for the supply of gas to each 
individual company. From that moment commenced 
the era of cheap gas supply and the prosperity of gas 
companies within the metropolis. The principle of a 
'regulated monopoly' then and there inaugurated has 
been so largely extended that at the present time the 
whole of the north side of the metropolis is supplied by 
one company, the largest in the world; and the south side 
by two companies, almost as important and equally 
prosperous. The experience of the London gas com- 
panies has thoroughly demonstrated the fact long in- 
sisted on, and long and vigorously disputed, that the 
interests of gas suppliers and gas consumers are identical. 
When competition prevailed between the thirteen com- 
panies, the price of gas to consumers was dear and the 
dividends to shareholders small, With a practical mo- 
nopoly, dividends now exceed the original limit of ten 
per cent., and the price which was fixed by the Act of 
i860, at four shillings and sixpence per thousand feet, 
and which was then charged to the consumer", is now but 
little more than one-half that sum. " 



Combinations and Critics 23 

London to-day has the cheapest gas in the 
world,, and London gas companies earn a 
higher rate of dividends than any other gas 
companies in the world. One cannot have a 
more forcible illustration of what experience 
has to say as to certain kinds of competition. 

On the perfecting of the combinations I am 
speaking of, fresh money is put into the con- 
solidated treasury, the machinery and plant are 
revolutionized by being modernized, amplified 
and systematized, and expenses are reduced. 
Is this done to enhance prices? — to lower 
quality ? No ! It is to improve quality and 
lessen cost; to create demand, not any longer 
to exhaust energy in seeking to divert it ; and all 
this that the public and the manufacturer, the 
consumer and producer, may have a common 
interest in the well-being of the new order of 
things. 

Another disadvantage which is said to flow 
from these combinations, is that the corn- 
competing manufacturer who has not become 
a part of them, will be injured in his business. 
I am free to confess that this is not an apparent 
but in some respects a real disadvantage; but 
it is a disadvantage which results from an 
inexorable law of our life. Every new industry 
displaces or temporarily injures another. When 
Stevenson, the inventor, was advocating the 
application of the steam engine to railroads, 
he was gravely asked whether it would not be 
a bad thing if a cow should get on the track, 



24 The Trust: Its Book 

and Stevenson's reply was "Yes, mighty bad 
for the coo." But, though the effect of these 
combinations may be temporarily injurious 
to other interests not united with them, this 
natural defect must not be confounded with 
the intention of bringing about such a result. If 
there is an intention in the formation of such 
combinations, of ruining the trade of others 
through personal malice or ill-will, then the 
combination is not a combination for trade or 
manufacture at all, but a combination for 
♦conspiracy, and should be dealt with by public 
sentiment and by law as all conspiracies are 
dealt with. A remedy is soon found for such 
flagrant abuses. 

The original legislation against combina- 
tions, however, was not directed against com- 
binations of capital, but against combinations 
of labour. They w T ere the more serious menace 
to public security and prosperity; and it was 
not until early in this century that the rigour 
of those laws was relaxed. To-day trades 
unions are not frowned upon. If organized 
for due protection of the interests of their 
members they are to be applauded. If or- 
ganized for the purpose of destroying other 
labour organizations, or excluding non-mem- 
bers from participation in labour, then they 
become combinations for conspiracy and should 
be suppressed. 

That manufacturing combinations, even 
when organized for a proper purpose, fre- 



Combinations and Critics 25 

quently result in injury to others cannot be 
denied. But for that reason they are not to 
be visited with condemnation. Said Lord 
Coleridge, in a celebrated case: 

"It must be remembered trade is and must be in a 
sense selfish; trade not being infinite, nor the trade of a 
particular place or district being possibly very limited, 
what one man gains another man loses. In the hand-to- 
hand war of commerce as in the conflicts of public life, 
whether at the bar, in parliament, in medicine, in engin- 
eering (I give examples only) men fight on without 
thought of others, except to excel or defeat them. Very 
lofty minds, like Sir Philip Sydney with his cup of water, 
will not stoop to take an advantage if he think another 
wants it more. Our age in spite of high authority to 
the contrary, is not without its Sir Philip Sydneys. But 
these are the counsels of perfection which it would be 
silly indeed to make the measure of the rough business 
of the world as pursued by ordinary men of business. " 

It is the survival of the fittest always, in 
the animal kingdom, in business and in the 
professions. The struggle for pre-eminence is a 
constant and, at times, a remorseless one. To it 
is summoned the highest intelligence as well as 
wealth — and in such a struggle, intelligence 
counts for more than wealth. 

The war of competition has been going on 
even in the agricultural industry. The suc- 
cessful farmer of to-day is the tiller of a thou- 
sand acres ; and aided by cheap transportation, 
supplies the world with low priced cereals. 
The small farmers of New England and of 
Europe cannot compete with him. New Eng- 
land farms have consequently been deserted; 



26 The Trust: Its Book 

and there has been a serious decline in the 
rents of landed estates in Europe. The larger 
and more intelligent producer, whether in 
agriculture or in manufacture, has the advan- 
tage, and in the end will succeed. When to a 
horse-car railroad is applied electricity as a 
motor, some suffer. The saddlers, the harness 
makers, the hostlers, the stable attendants, 
may find themselves temporarily without oc- 
cupation. For that reason do we say that 
electricity shall not displace horse-car railroads ? 
No ; because the public is to be considered, and 
the public has a larger interest in this question 
than have the few labourers whose occupation 
for the time being is gone. The greatest good 
for the greatest number is the true philosophy 
of life. 

The alleged disadvantages of such combina- 
tions, in the matter of the injury to other in- 
terests, are largely theoretical and imaginary. 
The instances are very rare, where one of these 
combinations has acted intentionally to the 
injury of another, and seldom has such in- 
jury been the natural result of their formation. 

As I have said, however, the manufacturing 
business has become a very difficult business 
to succeed in. It is untiring attention and 
high intelligence that ensures success. If 
you prohibit combinations you are not pro- 
tecting the weak and unskilled ; you are rather 
putting a premium upon their destruction. 
For their interests are considered in such 



Combinations and Critics 27 

combinations as they are invited to enter 
upon reasonable terms. But they must, if 
such combinations be prohibited, sink — first, 
into insignificance, and finally, into ruin, 
against the high intelligent competition which 
the law can never restrain. In such event 
this intelligence will control the industry, 
not through amalgamation or consolidation, 
but through the destruction of its competitors. 
I know of instances of this before such com- 
binations became popular or frequent. No 
human law can ever be devised to prohibit 
the monopoly of superior intelligence. 

There are one or two remaining objections 
perhaps worthy of notice: 

It is said that the independence of the 
individual manufacturer and of the workman 
is destroyed by becoming part of such or- 
ganizations. This objection should not be 
passed over lightly, because, if true, it is most 
serious. 

The advantages which come from such com- 
binations are, in large part, financial advan- 
tages to the producer and to the consumer ; 
but if I believed that these large aggregations 
of intelligence and wealth involved the degra- 
dation of labour, or were in any way inimical 
to labour, I should not be advocating them, 
nor should I consent to be financially inter- 
ested in them; for such undertakings, however 
well conceived or successful at the outset, 
end in disappointment. Every sensible man 



28 The Trust: Its Book 

has the elevation of the general public always 
in his mind. He knows that accompanying 
this elevation is higher intelligence and better 
workmanship, which results in more profit 
to the capitalist whose interests are in the 
manufacturing business, and in less outlay 
by the consumer. There also come with it 
purer morals, better laws, and greater security 
for money, whether it be in the manufacturing 
business or out of it. 

Instead of spasmodic growth and periodic 
depression, such combinations ensure con- 
tinued and fixed returns, so that the labourer 
will earn not only his livelihood but will be 
able to accumulate something against old age 
and for the benefit of his posterity; while the 
capitalist will, as is his due, receive an income 
upon his investment which will induce him to 
continue to be an employer of labour. Other- 
wise his investment will be in securities un- 
connected with the direction of labour or its 
interests. He will not fret himself concern- 
ing the annoyances of manufacturing busi- 
ness. He will become but a clipper of cou- 
pons. 

The workman connected with these enter- 
prises, though he devotes himself to what 
may superficially seem an insignificant part 
of a great establishment, is no less indepen- 
dent than was the farmer who formerly was 
at once spinner and weaver, shoemaker and 
blacksmith. He is not less able to deal with 



Combinations and Critics 29 

questions which confront him in life. He is 
not a slave of these corporations. His in- 
come is more certain than if he were connected 
with an isolated manufacturing establishment 
of uncertain duration and success. He needs 
no protection against right-minded aggre- 
gations of intelligence and wealth, for they 
consider it their first interests to protect em- 
ployees. The trades unions, too, protect him 
against wrong-minded combinations. He may 
be part of a great machine; but the machine 
is full of good and practical purposes, and he 
and his fellows have their hand upon the 
machinery that is driving all this vast enter- 
prise. As they may create, so they may 
arrest progress; and there is more danger to- 
day — and every frank man is willing to admit 
it — from an unwise combination on the part 
of labour than from the aggregation of wealth 
and intelligence represented in these large 
corporations.. 

The division of labour in manufacture, as 
conducted in these combinations, makes per- 
fect work possible. The farmer, when he 
was at work at several trades and industries, 
was not as good a workman as the black- 
smith of to-day, as the spinner of to-day, as 
the weaver of to-day, or as the shoemaker of 
to-day. Nor is the general workman in any 
of these industries so perfect in details as the 
man who is now attending to one department 
of manufacture. It is a day when men are 



30 The Trust: Its Book 

specialists, not only in trades, but in profes- 
sions; and there is nothing ignoble in all this. 
The bar has lost none of its best traditions 
because some of its members are specialists. 
No man to-day stands at the head of the legal 
profession as an advocate, and as an adviser of 
corporations. There are patent lawyers, con- 
veyancers, admiralty lawyers. No one is prom- 
inent in the medical profession as a practi- 
tioner of medicine and as a surgeon. Not only 
have medicine and surgery been separated, 
but again in turn they have been sub-divided ; 
and if one disease is to be treated, one physi- 
cian is sent for; if one operation is to be per- 
formed, one surgeon is sent for; if another, 
another surgeon is preferred. It is so in 
the world of business, and it is so in the 
manufacturing industry. " Non multa sed 
multum" is the motto of every successful 
man. 

There is for every right-minded man some- 
thing ennobling and elevating in the recog- 
nition that he is doing a thing completely, ef- 
fectively, understandingly. He has, too, an 
incentive to be master of its details, and to 
strive ever towards perfect workmanship; 
because he knows that these combinations 
are prompt to recognize merit, whether it be 
administrative or inventive. He is a part of 
a harmonious whole; and realizing his true 
relation to all this moving, restless energy, he 
may feel within himself the stimulus for greater 



Combinations and Critics 31 

effort, nobler aims, and the possibility of 
higher achievement. 

" Round swings the hammer of Industry, 

quickly the sharp chisel rings, 
And the heart of the toiler has throbbings 

that stir not the bosom of kings. " 

Again, it has been said that there is danger 
to be apprehended from these large capitals. 
I am not prepared to say that this thought 
is to be wholly disregarded. Under aggrega- 
tions of large capitals, whether of individuals 
or of corporations, there lurks a danger; and 
thoughtful men must be watchful of it. But 
I do not concede that they have yet become 
menacing, nor that the time will come when 
they should be limited. The way were easy, 
if we wished to accomplish this. Individual 
fortunes could be taxed out of existence. 
You might limit the right of corporate hold- 
ings, forbid their expansion, or restrict their 
original organization. But we know perfectly 
well that the aggregation of capital has brought 
with it more benefit to the poor than to the 
rich ; and we know, too, that the capital of 
these corporations does not compare with the 
wealth of individuals. This is the same old 
attack in another form, which has been made, 
time out of mind, upon corporations. Daniel 
Webster once said: 

"The attack upon rich and exclusive corporations is 
idle and delusive.'* 



32 The Trust: Its Book 

And again he said : 

"We know that corporations are only partnerships 
carried on in a more convenient manner than they could 
be done by indenture: that they are not monopolies; and 
that it is because of their convenience that they are em- 
ployed. " 

The same is true of those large corporations 
now known as combinations. Would that 
there were more of such public men, with his 
insight and his courage ! 

The demagogue who attacks corporations 
and combinations has his usefulness, per- 
haps, in making us more alive than we 
otherwise might be to the dangers which may- 
accompany accumulations of great capital. 
As good citizens we must see to it that in our 
effort to secure large returns upon invested 
capital, no harm shall come to the Common- 
wealth of which we are members, or to our 
country which is essaying successfully, for the 
first time in the history of the world, the 
problem of self-government. 

When this question is discussed and re- 
discussed, as from time to time it mu6t be, in 
our legislative bodies, in the debating society, 
in the country store, and in the home, do not 
forget that as advantages are relative, so also 
are disadvantages. There are, perhaps, some 
disadvantages about these organizations. 
Most of them are imaginary, or theoretical; 
but granted that there are disadvantages, we 
are not to judge an institution by its short- 
comings alone. 



Combinations and Critics 3$ 

Judged in this way, what would one say of 
the institution of marriage? It is the butt of 
the weekly punster, and too often justly so. 
It fails often to accomplish its higher mission. 
Yet would any sane man suggest, for that 
reason, that it be abolished? The progress, 
yes, the establishment of religion, has been 
marked by wrongdoing, by persecution, and 
by bloodshed. But for that reason does any 
man claim that religion has failed of the 
purpose of its divine author? No; because 
the test is whether, in the long run, it has made 
for righteousness. If it has, then its disad- 
vantages, shortcomings and its misdeeds are 
insignificant as compared with its good. The 
Constitution of the United States has been 
pronounced to be one of the greatest creations 
of the human intellect. Yet lawyers have 
argued and courts decided, concerning its 
meaning ; and on the construction of its language 
there developed one of the fiercest of modem 
wars for the maintenance of the Union it had 
created. Has our essay of republican gov- 
ernment by a written constitution, therefore, 
been a failure? 

And, let me remind you here, that the union 
of the two parts of this country, split asunder 
by this struggle, has only become complete 
within the past few years; and the manufac- 
turing industry has done more to bring about 
that union than any other agency. As long 
as the South was a producer of raw material 



34 The Trust: Its Book 

alone and the North a manufacturing section, 
their interests lay apart. But when we had 
established manufactures in the South and 
there resulted an exchange of raw material 
and manufactured products, then came the 
time when, through reciprocal relations, a 
union was created which could never have 
been established by force of arms. Daniel 
Webster — a sentinel as he always was on the 
watch tower of our country — long ago urged 
the introduction of manufacture into the South, 
predicting that we should thus cement a Union 
between the North and South, which, even in 
his day, was rapidly becoming a Union but 
in name. He recommended as prevention 
what we have seen the effect of as a cure. 

The legal methods for organizing industrial 
combinations deserve some mention; for the 
discredit into which some of these combina- 
tions have come is attributable to legal defects 
more than to any other cause. Industrial 
development is always in advance of legal 
machinery. It is only when commercial in- 
terests imperatively require them that our 
legislatures provide new laws for the new con- 
ditions. While we are in advance of Europe 
in the invention of labour-saving machinery 
and in the higher development of manufactur- 
ing industry, our law-makers are behind those 
of the Old World in providing laws for the 
larger aggregation of wealth and intelligence. 

Nearly fifty years ago the English Parlia- 



Combinations and Critics 35 

merit recognized the right of freedom of as- 
sociation for business purposes. Restrictive 
statutes were repealed, and laws were passed 
conferring upon individuals the right to as- 
sociate for business purposes, without restric- 
tions as to the number of persons, the amount 
of capital or the nature of the business. The 
associations under those laws lie at the very- 
foundation of England's prosperity and great- 
ness, and contributed largely to her long su- 
premacy as the financial and commercial centre 
of the world. 

The legislators of the State of New Jersey 
have been in advance of the legislators of 
sister States in providing laws for the organi- 
zation of industrial corporations. The law- 
makers of the State of New York, however, 
are beginning to see the great loss to that 
State by the diversion of capital to New Jersey ; 
and liberal amendments have just been en- 
acted by the New York Legislature for the 
formation of corporations. One of the New 
York legislators, who has closely studied this 
question, states that, in his opinion, "It is as 
prejudicial to business interests to pass laws 
to forbid the combination of capital as it 
would be to turn the universe back three 
hundred years, and pass laws forbidding the 
combination of labour. Laws should be passed 
facilitating the combinations of effort and 
means, whether these means are the muscle 
of the labourer or the accumulated wealth of 



36 The Trust: Its Book 

the capitalist." Men high in authority in 
our national government, who have given this 
matter thoughtful attention, consider that the 
time has come when Congress should pass gen- 
eral laws, free to all citizens of the United 
States, under which large manufacturing cor- 
porations may be organized. 

One more thought and I shall have fin- 
ished. There will come a time when the 
protection now afforded to domestic manu- 
factures will be largely reduced. As at 
present constituted they could not survive 
any considerable reduction of that protection. 
But if we are to have in this country freer trade, 
or absolute free trade — which everyone recog- 
nizes as desirable when we are in a position to 
meet it — it can safely come only when the way 
is prepared for it by the superior development 
of our manufacturing industries. We have seen 
how cost can be cheapened through an immense 
production of an article under one directing 
head; and although we are handicapped by 
dearer labour than exists in the densely popu- 
lated countries of Europe, we have the advan- 
tage, which will go on increasing, of the most 
liberal consumption here at home for the 
greater part of our manufactured products. 

If it be denied that the formation of these 
combinations will help to make possible freer 
trade, or free trade, let me call attention to the 
significant fact that the only industries which 
have arisen above the needs of protection are 



Combinations and Critics 37 

those working under the advantages of com- 
bination. The oldest and most important 
combination to-day is supplying the markets 
of the world, exporting annually its products 
to the value of over $50,000,000, not only to 
Europe, but to the cheap-labour countries of 
China and Japan. When the treaties of 
reciprocity were being negotiated with the 
Spanish-American States, the question arose 
as to the desirability of the United States 
asking for the free admission or a concession 
of duty on petroleum. The position taken 
by the eminent statesman who was directing 
those negotiations was that we produced by 
far the cheapest light in the world, and there 
was no necessity of asking for it any con- 
cession. 

There is ample crude petroleum in South 
America and in Russia to supply the wants of 
the world, but it is the concentration of ability 
and wealth that has put us in a position in 
that industry to ask no consideration and to 
fear no rivals. At the same time, the price of 
oil has been steadily reduced along with the 
lessened cost of refining and the saving which 
the Standard Oil Company has been able to 
make of millions of dollars annually by manu- 
facturing every important article required in 
its business. If every manufacturing interest 
were in that position to-day there would be no 
need of a protective tariff. We could throw 
open our markets without fear or favour. In 



38 The Trust: Its Book 

my judgment, we can reach that ideal posi- 
tion by fostering this higher development of 
manufacturing enterprise, taking advantage of 
aggregations of wealth, of matured judgment, 
of experience, of executive ability, of inventive 
genius, of reduced cost through large produc- 
tion. This is how to compete successfully 
in manufacture with the whole world. 



CHAPTER II 

AGGREGATED CAPITAL: ITS HISTORY 
AND INFLUENCE 

By S. C. T. Dodd 

To study the history of aggregated capital 
one must begin at a comparatively recent date. 
The ancient world knew little about it. Wealth 
in the hands of single individuals or families, 
accumulated to wonderful proportions, but it 
was unproductive wealth. Business was too 
ignoble for the Egyptian, the Greek, the Roman 
aristocrat. Plato, in his laws, ordered a citizen 
to be punished if he attempted to concern 
himself with trade. Augustus is said to have 
condemned a senator to death because he so 
degraded himself as to engage in manufacture. 
Rome obtained her wealth by plunder, not by 
production. Hence, these nations knew little 
of capital as we are now to consider it — wealth 
used in reproducing wealth; still less did 
they know of aggregated capital — large capital 
composed of aggregations of the smaller capitals 
of persons associated in trade. 

Little did that great commercial nation, Eng- 
land, know of aggregated capital until within 
the last three centuries. Prior to that time 
wealth was almost solely in landed estate, or 

39 



40 The Trust: Its Book 

in personal property used for hoarding or 
display. Trade was considered unworthy of 
a freeman. The business man, or shopkeeper, 
is still looked upon with contempt by the 
English landed aristocracy, a survival from 
those old days. Then there was little de- 
mand for active capital and none for ag- 
gregated capital. There were no banks in 
which small savings might be placed for use 
as an aggregated mass. Outside of farm 
labour there were no employers or employees. 
The tailor needed only his goose and needles, 
the tinker his pot and irons, the cobbler his 
hammer and last, the farmer his plough and 
spade, and the few tools necessary to manu- 
facture his wool, flax and skins, for his own use. 
Now all is changed. Individual labour, 
where a man is at once master and man, is 
almost unknown, except remote from the 
great centres of trade. Labour is divided and 
subdivided, and is carried on by means of 
costly machinery in great factories. Work- 
ingmen are hands, and are subject to the direc- 
tions of superintendents. The smoke of the 
workshops and the railways carrying products 
befoul the landscape and vex the hearts of 
John Ruskin and his sentimental followers; 
trade strikes and riots are known; capital and 
labour are, or are said to be, at enmity. For 
this aggregated capital is responsible, because 
without aggregated capital commerce and 
manufactures are impossible. 



Aggregated Capital 41 

Surely those must have been idyllic days 
before the great change. The farmer ploughed 
his soil and called no man master ; the plough- 
boy went merrily whistling to his work as the 
sun rose above the hills ; the milk-maid skipped 
over the dewy fields ; the harvest was gathered 
home with songs and rejoicing; the villagers 
danced at eve about the be-ribboned May-pole. 
All was like a scene in an opera and just as real. 
No such days existed except in the imagination 
of poets. England, prior to the days of the 
introduction of machinery and her extensive 
manufactures and commerce, was a very differ- 
ent land from that pictured. The mass of the 
people lived in abject poverty. Their food 
was peas, black bread, fern roots and the bark 
of trees. Their clothing was of leather or 
their limbs were wrapped with wisps of straw. 
Their thatched huts were without chimneys or 
glass; a hole in the roof partly carried off the 
smoke from the fire on the mud floor, and the 
fire had to be covered at the ringing of the 
curfew bell. Many of the people were as 
savage as Indians. Half -naked women chanted 
wild measures, while the men with brandished 
clubs danced a war-dance. One-half of the 
families did not know the taste of fresh meat, 
and most of the other half had it but once a 
week. Roads were mere gullies filled, in wet 
weather, with mud, through which travellers 
floundered on foot and on horseback. The 
king and court travelled in carts drawn by 



42 The Trust: Its Book 

oxen. The first carriage was introduced in 
1 561. It was deemed a sinful luxury, and 
was denounced as " a temple in which cannibals 
worshipped the devil." The houses were 
without ventilation; the floors were covered 
with rushes, the bottom layers of which were 
left untouched sometimes for twenty years, 
alive with vermin and foul with unspeakable 
abominations. The house servants went about 
naked or in extremely filthy garb, and slept on 
the ground by the fireside at night. Noble- 
men were destitute of comforts which are now 
the necessities of every workingman. Clean 
shirts were almost an unknown luxury; the 
coat-sleeve served the purpose of a handker- 
chief. The purest country air was fouler than 
the air of our city slums; the death-rate was 
double that of to-day, and men were old at 
forty. The people were as degraded mentally 
and morally as physically; a majority of mem- 
bers of Parliament could neither read nor 
write; religion consisted in reciting the cate- 
chism or in ecstatic visions; the cart ever 
creaked on its way with victims to Tower Hill 
or Smithfield or Tyburn. 

Such was "Merrie England," such the 
"golden age" of the past, to which imaginative 
men would have us return, and to which we 
will return when we shall have abolished trade 
combinations and the aggregations of capital 
which alone render modern industry possible. 

The great factors of modern progress have 



Aggregated Capital 43 

been associations of individuals and combina- 
tions of capital in business. Without this, 
commerce, manufactures, business, in the mod- 
ern sense of these words, cannot exist. While 
England was still in a state of semi-barbarism, 
other nations had experienced the light of 
civilization, and the path of commerce and 
civilization was identical. In all ages and 
countries commercial centres have been the 
centres of culture, arts and sciences. It is 
only necessary to refer to Carthage, Corinth, 
Athens, Alexandria, Palmyra, Rome. During 
the dark ages civilization was preserved by 
the commercial Arabs, and had its seat in their 
beautiful cities in Arabia, Africa and Spain, 
and after the dark ages it was restored to the 
West through commerce. The Venetians, the 
Genoese, the Florentines, and after them the 
Portuguese and the Netherlanders began to 
learn the powers of association and of aggrega- 
tion of capital. They established banks; they 
formed great combinations for trading pur- 
poses ; such as in modern days would be called 
trusts; they sought for treasures in distant 
lands; they covered all known seas with their 
commerce. Trace the paths of this trade 
from the direction of the rising to the setting 
sun, through Venice, Florence, Genoa, the free 
cities of the Rhine and the Netherlands, and 
you trace the direct and almost contemporan- 
eous path of knowledge, enlightenment, arts, 
culture, comfort, and all that makes civilization. 



44 The Trust: Its Book 

The Hanseatic League, a trust which em- 
braced not only thousands of persons, but 
cities and states, with capital without limit, 
penetrated the known world, kept free the 
paths of commerce from the freebooters which 
preyed upon it, and redeemed the north of 
Europe from barbarism. The great East In- 
dia trading companies not only discovered 
America and opened up the treasures of many 
lands; they brought also to Europe the arts 
and learning of the world. Still better, by 
association of mind with mind, like flint strik- 
ing steel, mental fire was created, thought was 
developed and Europe evolved a civilization 
far in advance of that of other lands. 

It was not until the close of the Sixteenth 
Century that England began to feel the spirit 
and effects of association of persons and capital, 
and of the extended commerce they made possi- 
ble. The defeat of the Armada and the de- 
cadence of Spain opened the seas to English 
merchants. In 1553 a great company was 
formed to trade with Russia. In 1578 Drake 
circumnavigated the globe. In 1600 the first 
English East India Company was formed. In 
a few years Englishmen were buzzing over the 
world, taking possession by their associated 
companies of old and new continents. The 
American colonies were formed by chartered 
corporations whose capitals were subscribed 
by English merchants. Such were the Vir- 
ginia companies, the West India Company, 



Aggregated Capital 45 

the New England Company and a host of 
others. They were mere trading companies. 
The Pilgrim fathers tried, but could not obtain 
a charter; their enterprise, however, was fos- 
tered and encouraged by the London Company 
and the Plymouth Company, which companies 
had sent expeditions to, and had fully mapped, 
the coast of New England before the Pilgrims 
landed. The cynic who said the Pilgrims 
came here for "God and gain" was truthful, 
but not necessarily reproachful. The act which 
has God and gain for its motive is not likely to 
be wrong. 

Almost contemporaneously the condition of 
England began to improve. Pavements were 
laid in the filthy streets of London, and 
their darkness was, if not dispelled, at least 
made visible. The smoky and unwholesome 
cottages began to give place to houses of brick 
and stone with rooms "large and comelie" and 
lighted with windows. Stoves were intro- 
duced. Men began to experience the luxury 
of being warm. Beds with bolsters took the 
place of the floor with logs. Clean wood floors 
and even carpets appeared instead of vermin- 
infested and filthy rushes. Shirts began to 
be worn and even washed; and handkerchiefs 
usurped the place of the coat sleeve. It was 
the inevitable result. It is with men as with 
wind and water : movement means life, stagna- 
tion means death. Capital is the force which 
vitalizes society. 



46 The Trust: Its Book 

But still a new era was to dawn for England. 
Commerce made manufactures necessary and 
necessity stimulated invention. In 1769 Har- 
greaves invented the spinning jenny, and soon 
after Watt invented the steam engine. Hence- 
forth labour was to be conducted less and less 
by the vital force of man, more and more by 
the forces of nature guided and governed by 
man's intelligence. The co-operation of many 
men and the aggregation of their small capitals 
were necessary to erect factories, to purchase 
machinery, to organize labour and to secure 
its results by opening markets for the exchange 
of manufactured products among all peoples. 
This was followed by the railway, for which 
capital in still large and larger aggregations 
was required, and thus the world was revolu- 
tionized. 

" England, " to use the words of Daniel 
Webster, ''became a power to which Rome, 
even in the height of her glory, was not to be 
compared — a power which has dotted the 
whole surface of the globe with her possessions 
and military posts — whose morning drum- 
beat, following the sun, and keeping company 
with the hours, circles the earth daily with one 
continuous and unbroken strain of martial 
airs. ' ' But far better than her military prowess, 
the air that encircles the earth, and swings 
with it in its revolutions, throbs through 
all its wide expanse, and in every moment 
of its daily progress with the roar and 



Aggregated Capital 47 

clatter of machinery of the English-speaking 
people. 

"The ships that pass between land and land 
are like the shuttles of the loom weaving their 
web of concord among the nations." May 
their good work prosper until all nations shall 
learn that their true glory lies in work and not 
in war, and until everywhere the throb of 
machinery shall replace the throb of war- 
drums. 

Not labour alone, not machinery alone, but 
labour made possible, and machinery con- 
structed, organized and moved by aggregated 
capital, has fertilized deserts, dried up marshes, 
kept a million spindles in motion and a million 
wheels revolving, opened mines, utilized coal 
and metals, converted mountain crags and 
clay into comfortable dwellings, filled the seas 
with the white sails of commerce and the air 
with the smoke of manufactures, bound lands 
together with steel rails, made waters and 
winds and lightnings our servants, brought 
man in contact with man and mind with mind, 
inspired thought, created civilization, pene- 
trated the unseen, discovered the unknown, 
and made all nature subservient to the human 
race. 

To stop co-operation of individuals and 
aggregation of capital would be to arrest the 
wheels of progress— to stay the march of 
civilization — to decree immobility of intellect 
and degradation of humantiy. You might as 



48 The Trust: Its Book 

well endeavour to stay the formation of the 
clouds, the falling of the rains, or the flowing 
of the streams, as to attempt by any means 
or in any manner to prevent organization of 
industry, association of persons, and aggre- 
gation of capital to any extent that the ever- 
growing trade of the world may demand. 

So far, you may say, I have been dealing 
in glittering generalities. I shall descend to 
particulars to show how capital through 
manufacture and commerce has benefited 
mankind. 

The object of all labour is to supply human 
wants, and want is the incentive to all human 
progress. The wants of the barbarian are few, 
the wants of the civilized man many. The 
greater our wants the higher our life. The 
highest good will be obtained when all the 
reasonable wants of civilized man are supplied 
with the least labour. Nature is able to sup- 
ply all our wants without undue toil if we 
rightly know her laws and wisely utilize her 
forces. Rightly to know is the province of 
knowledge. Rightly to utilize is the province 
of capital. In addition to the grosser material 
wants, every human being needs, and is en- 
titled to, time for repose, time for recreation, 
time to exercise his mental faculties, time to 
enjoy his home and his family. This becomes 
possible just in proportion as the use of capital 
and machinery makes work more effective, 



Aggregated Capital 49 

and enables man to produce most with the 
least labour. 

Homer says twelve women were constantly 
employed grinding grain in the house of Pene- 
lope, probably one grinder to supply twenty- 
five bread-eaters. Now, the labour of one 
man, aided by the force of nature which is sup- 
plied by the force of capital, produces flour 
for 4,000 persons. 

But little over a century since the steam 
spindle and loom were set in operation. Now 
a cotton spinner effects the results which were 
obtained by the labour of 320 men in 1769. 
One operator in a cotton factory supplies 
the wants of 250 men; in a woollen factory, of 
300 men; in a shoe factory, of 1,000 men. In 
the Pyrenees iron is still produced as it was 
centuries ago. One man produces about thir- 
teen pounds per day. At a modern blast fur- 
nace the labour of one man is equal to the 
production of 500 pounds per day of a far 
better product. 

A man will carry sixty-six pounds twelve 
miles per day over bad roads. A horse will 
carry 440 pounds. A locomotive will draw 175 
tons a greater distance in an hour at a cost of 
six-tenths of a cent per ton per mile. 

But, it is often asked, in what way is the 
workingman benefited by this? If a machine 
does the work of 320 men, are not that many 
men thrown out of employment ? 

The first effect of machinery is to displace 



50 The Trust: Its Book 

labour and thus to create temporary hardship. 
Its secondary effect is to create a demand for 
additional labour, while at the same time it in- 
creases the wages of labour and decreases the 
price of products upon which the labourer 
subsists. Labour multiplies and extends in 
all directions in proportion as capital furnishes 
man with the means of labour. 

In England before the invention of the spin- 
ning jenny there were 5,200 spinners and 2,700 
weavers. Ten years later there were 105,000 
spinners and 247,000 weavers. In 1833 there 
were 487,000 spinners and weavers. To-day, 
taking the collateral industries dependent upon 
the cotton, woolen and flax industries, not less 
than 2,000,000 persons are employed instead 
of the 8,000 employed at the time the spinners 
and weavers broke the machines because they 
destroyed the labour. 

The railways displaced the freight waggons 
and stage-coaches, and many a Tony Weller 
lamented that honest industry was destroyed. 
Now the railways of the United States alone 
give employment to an army of 750,000 men, 
not encluding the army engaged in the collateral 
industries, necessary to maintain the tracks, 
machinery, etc., nor the still larger army en- 
gaged in the hundreds of industries which, 
without railways, could not exist. Thus one 
industry creates another. Aggregated capital 
and organized industries are synonymous terms. 
Railroads, telegraphs, manufactories, are sim- 



Aggregated Capital 51 

ply utilized capital by which labour is made 
possible and effective. 

While it is usually admitted that capital, 
by building up these wonderful industries, has 
enlarged the demand for labour, the assertion 
is made and repeated that the wages of the 
labourer have not been increased nor his con- 
dition improved. The capitalist prospers, the 
labourer is oppressed. The rich become richer, 
the poor poorer. 

The fact is that in proportion to the effective- 
ness of machinery in creating wealth cheaply, 
the wages of the labourer are increased, his 
hours of labour are shortened, and the prices of 
products which he consumes lessened. When- 
ever capital is small we find more labourers 
to accomplish a given result, less effective 
work, longer hours, lower rates of wages, 
higher cost of products. 

In 1800 the weaver could buy ten yards of 
cloth with a week's wages. In 1890 he could 
buy 150 yards and work thirty hours less per 
week. 

Another fact speaks volumes. In England 
the consumption of sugar has within the last 
fifty years multiplied five times for each person ; 
of tea, four times; of butter, seven times; 
of bacon and ham, eleven times ; and of wheat 
flour, five times. 

The last thirty years have witnessed a con- 
centration of industry and a combination of 
capital never before dreamed of. It is the 



52 The Trust: Its Book 

natural and inevitable result of steam, the 
railway and the telegraph. Distant places 
are brought closer together, business is not 
bounded by the lines of the town, the state or 
the nation. The world is the market, and 
business and capital in business must be as 
boundless as the trade. 

In 1830 there were in the United States 801 
cotton factories with $40,000,000 capital. In 
1880 there were 756 factories with $208,000,000. 
As a result of this concentration, three times as 
many spindles were operated by each labourer, 
the product from each spindle was one-fourth 
greater, the product per dollar invested was 
doubled, the consumption of cotton cloth was 
doubled, wages were doubled, the number of 
persons employed more than doubled. The 
labourer could, with his wages, buy five yards 
of cloth in 1880 for one in 1830, and the cotton 
manufacturer is now richer with his two cents 
a yard profit than he was then with his four 
cents profit. A large trade with small profits 
is better for all concerned than a small trade 
with large profits. 

In twenty separate branches of industry, in 
which concentration of business and aggrega- 
tion of capital were most manifest, from i860 
to 1885, wages increased from $8.64 to $9.88 
per week, while the purchasing power of wages 
in the products thus manufactured increased 
from 100 per cent, to 150 per cent. In the 
industries in which special concentration took 



Aggregated Capital 53 

place the increase of purchasing power of 
wages has been far the greatest. In railway- 
transportation it amounts to 142 per cent., in 
telegraph 283 per cent., in petroleum 900 per 
cent. 

There is no mistaking the fact that concen- 
tration is the order of development; concen- 
tration of people in large cities, concentration 
of handicrafts in large factories, concentration 
of transportation in great railway systems. 
To successfully resist it we must banish steam 
and discharge electricity from human service. 
Man is made for co-operation. Savages unite 
only in war. Civilized people unite in work. 
The evolution of association is the evolution 
of civilization. Considering that this tendency 
is inevitable, is it wise to resist it? Is it not 
wise to consider carefully how it may more 
and more be made a power for good, and less 
and less a power for evil ? 

Contrast the countries where industries 
are concentrated, where capital is greatest, 
and machinery most effective, with those 
where larger partnerships and corporations are 
almost unknown, where industry is not organ- 
ized and large aggregations of capital are not 
the rule. The condition of labour is always 
worst where capital is small. Business drifts 
in old ruts, cannot attempt new enterprises; 
manufacturing is done by hand or by defective 
machinery; products are dearer, wages lower, 
a greater number of labourers are idle, and their 
general condition much more deplorable. 



54 The Trust: Its Book 

In Spain 24 per cent, of productive power 
is furnished by vital force; in Italy, 34 per 
cent. ; in Portugal, 42 per cent. ; in England 
and America, 4 per cent. That is, to accom- 
plish the same result, 42 labourers would be 
employed in Portugal, 34 in Italy, 24 in Spain, 
and 4 in England or in the United States. 
The wages in the United States are nearly three 
times higher than wages in Portugal, Spain or 
Italy. There are ten idle men in Portugal 
to one in the United States, and the general 
condition of the working classes in those conti- 
nental countries is beyond comparison worse 
than the condition of our working classes. 
The reason for this is, that in the countries 
named confidence and security does not exist 
such as leads men to entrust their interests 
to others, and to risk their wealth in trade. 
Aggregations of capital are not there possible 
such as are necessary to erect great factories, 
to introduce the most costly machinery, and to 
build the necessary steamships and lines of 
transportation. In every land wages are higher 
and the condition of the labourer best where 
most capital is employed, and that capital 
most concentrated. In India capital amounts 
to $35 per head, and wages are 60 cents per 
week; in Russia, capital $190 per head, of 
which only 10 per cent, is aggregated capital, 
wages $3.50 per week; France, capital $1,000 
per head, of which 26 per cent, is combined 
in large industries, wages $5 per week; in 



Aggregated Capital 55 

England, capital $1,300 per head, 78 per cent, 
of which is united capital, and wages are $7.74 
per week. 

It is not, however, necessary to contrast 
old England with modern England, nor Eng- 
land with other lands. There are many 
among us who can by recollection contrast 
with the present time the days before the 
railroads and manufactories had in this coun- 
try drawn together large capitals and made 
concentration necessary. Our fathers worked 
harder, earned less, and were deprived of com- 
forts which the labouring man of to-day con- 
siders necessary to his existence. The luxuries 
of their day are the necessities of ours. You 
may say our fathers were hardier and better 
men than their degenerate sons. This I deny. 
Men of to-day are stronger and live longer than 
their fathers, and they are more righteous, 
even if they have less of that dogmatic faith 
and form which with our ancestors passed for 
religion. To admit otherwise would be to 
admit that the world has ceased to progress. 

But it is not necessary in proof of my posi- 
tion to compare the past with the present. 
Given differences of place and all times are 
contemporaneous. 

There are over two millions of people in the 
mountains of Virginia, Tennessee and North 
Carolina, living to-day as our ancestors lived, 
without the benefits of capital, machinery, 
railroads or commerce. They are of good de- 



56 The Trust: Its Book 

scent and started fairly with the other settlers 
of America. They raise, card and spin their 
own wool and cotton, and wear homespun 
cloth. Five persons in ten hours convert five 
pounds of cotton into cloth worth twenty cents 
a yard, making their labour worth about twenty 
cents a day. They are not an idyllic people; 
even Charles Egbert Craddock has failed to 
make them poetical. As the world has pro- 
gressed through the aid of aggregated capital, 
and the improvements it renders possible, 
these people have been left behind. Their 
mountains are filled with coal and other min- 
erals, their forests are composed of valuable 
timber, but they do not utilize them. The 
laziness, filthiness, mental and moral degra- 
dation, all that may be summed up as "general 
cussedness" of these people is proverbial. To 
send missionaries to them at present is useless. 
What they first need is the capitalist. When 
enterprise and energy, backed by capital, shall 
have aroused their dormant souls, and infused 
into them new physical and mental life, then 
the missionary may follow and arouse them 
to new spiritual life. In all progress the 
material is first, and capital — in these days 
of steam and machinery, aggregated capital — 
is the basis of material progress. 

In this hurried sketch of the influence of 
aggregated capital on the world's progress I 
confess I have, thus far, dwelt upon the bright 



Aggregated Capital 57 

side of the picture. So great is modern de- 
nunciation of capital that it is necessary to 
recall the fact that it has done some good. All 
that has been said is commonplace; neverthe- 
less many are prone to forget even such com- 
monplace facts as have been recalled to your 
mind. 

There is a dark side to the picture, and the 
real lesson of this essay, if it has any, will be 
in considering the more sombre colours and 
finding some reason for their existence. I have 
spoken of the great trading companies of two 
or three centuries ago, and of the vast results 
accomplished by them. I could tell you also 
of evils which they caused, and it would be a 
picture of injustice, oppression and wrong. 
They were monopolies; that is, they held a 
grant from the government for the exclusive 
right of trading with certain countries. An 
exclusive right granted by the government is 
what constitutes a monopoly. Without such a 
grant, no association of men, no aggregation 
of capital, can succeed in monopolizing ordinary 
trade. It never has been done and it never 
can be, except, possibly, under peculiar cir- 
cumstances which I shall mention hereafter. 

These great trading companies were not only 
monopolies, but the government also con- 
ferred upon them political powers. They 
governed the semi-barbarous people with whom 
they traded, and they embroiled their govern- 
ments in wars with other nations which granted 



58 The Trust: Its Book 

like franchises. They became rapacious and 
cruel. Their trade degenerated into robbery, 
and their commerce into piracy. All the wars of 
Europe, from the peace of Utrecht to the 
outbreak of the great Continental war, were 
waged in behalf of these monopolies of com- 
merce. 

Nearly all these monopolies eventually failed, 
and associations to-day which indulge in the 
vain hope of monopolizing trade may learn a 
lesson from their downfall. Let me state the 
reasons in the words of Thorold Rogers. ' ' They 
kept up prices and so limited consumption. 
They strained every nerve, exhausted their 
credit in their effort to keep by main force 
other traders out of the field, experience prov- 
ing that the only way one can check competi- 
tion is by lowering prices. In the expectation 
of getting one large profit on each transaction, 
they succeeded in making a small profit or even 
a loss on their whole transactions put together ; 
for it cost more to protect a designedly narrow 
trade than it would to establish and render 
permanent an intentionally wide one. In 
brief, they narrowed their market and so 
narrowed their profit. " 

Every business association of the present 
day formed for any other purpose than to avail 
itself of the economic benefits of association, 
by means of which it may be enabled to lower 
prices and to extend its market, has experi- 
enced the truth of the words just recited. 



Aggregated Capital 59 

In those days no corporation was formed 
without exclusive privileges. Even the smaller 
and local business of the country was monopol- 
ized by aid of government grants. Parliament 
created franchise enactments ; sovereigns granted 
them by patent. The right to labour became 
a privilege for which some government favourite 
received a royalty. The government inter- 
fered with the butcher at the shambles and 
the baker at the oven. The peasant could 
not grind his corn at his own mill, nor sharpen 
his tools on his own grindstone, nor make his 
cider at his own press. 

The government having thus undertaken to 
farm out business, succeeded, as may be sup- 
posed, in utterly disarranging it. To set its 
machinery right hundreds of other laws to 
regulate trade were enacted, each one serving 
only to intensify the trouble. Laws regulated 
wages, they regulated prices, they interfered 
with manufactories, with markets, with ma- 
chinery, with shops. Up to 1820 two thousand 
laws had been passed to regulate commerce, 
and each law was an unmitigated evil. Buckle 
has not overstated the facts in saying that 
"every European government which has legis- 
lated respecting trade has acted as if its main 
object were to suppress the trade and ruin 
traders. Instead of leaving the national in- 
dustry to take its own course, it has been 
troubled by an interminable series of regula- 
tions, all intended for its good, and all inflicting 



60 The Trust: Its Book 

serious harm. To such a height has this been 
carried that the commercial reforms which 
have distinguished England during the last 
twenty years have solely consisted in undoing 
their mischievous and intrusive legislation." 
Business in those days was, as the socialists 
would have it now, controlled by government, 
and a sorry mess the government made of it. 

Is it surprising that aggregated capital did 
not exert its full influence for good, or that it 
has been charged with evils that were solely 
the result of evil laws ? The prejudices against 
corporations and capital existing to-day are 
largely a survival from those days. The fault 
however, was neither in association nor in 
aggregation of capital; it was in the fact that 
all were not equally free to avail themselves 
of the advantages which these instrumentalities 
conferred. 

Laws of the most severe character were 
passed against associations unprotected by 
government charter, whether of labourers or 
of business men. It was an offence for work- 
ingmen to combine for any purpose; it was 
made penal to form partnerships above five 
persons to engage in certain branches of trade. 
It was a crime punishable with death and for- 
feitures of lands and goods to form a joint 
stock association, unless a special government 
grant was held. This infamous act, known 
as the Bubble Act, was passed for the purpose 
of protecting the monopoly granted to the 



Aggregated Capital 6i 

South Sea Company against competition by 
voluntary associations. It is a fact, which 
should be better understood, that the struggle 
against monopoly was a struggle for freedom 
of association of persons and capital and against 
laws which impeded that freedom. It was a 
battle not only against exclusive privileges of 
trade, but also against the exclusive privilege 
of combining for the purpose of trade. 

These mischievous laws were not erased 
from the statute books of England until 1825, 
and absolute freedom of association was not 
granted until 1844. There was prosperity 
prior to that time, because partnerships and 
associations were formed and men put their 
capitals together in spite of the law and all of 
its penalties. Neither King nor Parliament, 
neither fines nor imprisonment, could prevent 
the voluntary association and combination of 
capital in business. Hundreds of such asso- 
ciations existed, millions of dollars of capital 
were invested. Had it not been so, England's 
great factories would never have been built, 
her rich mines would never have been opened, 
her commerce would not have covered every 
sea. For half a century business has been free 
in England — the right of association is without 
restriction — capital may be aggregated without 
limit, and England's greatest era of prosperity 
dates from the day of her freedom from unwise, 
unjust and iniquitous laws which deprived 
both the labourer and the man of business of 



62 The Trust: Its Book 

natural liberty by impeding and restricting 
the right to labour and trade, and the right of 
associating persons and capital for the purpose 
of labour and trade. 

The settlers of this country brought English 
laws and prejudices against combinations with 
them; but capital being limited, they were 
forced to combine in spite of their laws and 
prejudices. Partnerships in business were 
common from the earliest date ; and the legisla- 
tures created corporations with a free hand. 
Our States were, however, surprisingly slow 
in ridding themselves of the monopolistic 
features of corporations, to wit: exclusive privi- 
leges. Always a source of corruption and of 
injustice, it is singular that the States tolerated 
the disgrace for so many years. Now, in 
nearly all the States of the Union the right 
of combination is unrestricted, and no exclu- 
sive right or privilege can be granted. ' Three 
or more persons may form a corporation to 
carry on any lawful business by simply signing 
and filing an instrument declaring their intent. 
The number who may combine and the capital 
they may employ is unlimited. 

The Federal government still creates monopo- 
lies by issuing patent rights. Some States 
create others by granting exclusive privileges; 
some public industries, such as gas and water 
companies, and possibly, railroads, are quasi- 
monopolies, by virtue of the nature of their 
business. Combinations between such com- 



Aggregated Capital 63 

parties and between them and companies 
owning minerals, limited in extent, may result 
in something akin to monopoly ; but so long as 
the legislatures claim and exercise the power 
of fixing the charges of these public companies 
there is far more danger of legislative con- 
fiscation than there is of oppressive monopoly. 
With few exceptions, trade is now free to all, 
and association for the purpose of trade is 
free to all on the same terms. More corpora- 
tions are created in each of our principal States 
now in one year than existed in the civilized 
world at the beginning of the present century. 
They have become the greatest means of 
State and national prosperity. They have 
promoted industry and thrift in every branch 
of manufacture and commerce. They utilize 
the forces of nature for man's benefit. They 
are the instruments of modern civilization. 
They have lessened the prices of necessities, 
increased the wages of labour, brought luxur- 
ies to thousands of homes and comfort to 
millions. We boast of our laws which guaran- 
tee political and religious liberty. Not one 
whit less in importance to the individual, and 
in their effect on the general welfare, are our 
laws guaranteeing industrial liberty. 

I have said the right of association is free 
in this land. I should have said it was free 
until within the last four years. There have 
been lately placed in the statute books of 



64 The Trust: Its Book 

twelve or more States enactments which, if 
they could be enforced, would make an ordinary- 
partnership criminal, and in at least six States 
enactments which inflict the penalty of fine 
and imprisonment for uniting persons, skill 
or acts for the unholy purpose, among others, 
of reducing — I am not mistaken in the word — 
of reducing the prices of commodities. A 
modern Federal law also exists which, literally 
interpreted, forbids business of any magnitude ; 
but Federal judges have thus far found it 
easier to dismiss proceedings under it than to 
guess at its real meaning. Legislatures seem 
to be vying with each other in efforts to dis- 
courage the saving, accumulating and use of 
capital. They undertake to fix the prices of 
transportation and commodities, and propose 
systems of taxation intended to rob the capi- 
talist while he lives and his children when he 
is dead. We are copying and intensifying the 
mistakes of our ancestors and the result will 
be the same. The doctrine of Karl Marx, that 
''capital is robbery," is working like leaven 
among the people, although it is not yet pub- 
licly announced as a principle which controls 
legislation. 

The last quarter of a century has witnessed 
a concentration of business such as the world 
before never knew. What is the result ? Has 
competition been destroyed? On the con- 
trary, it was never so strong. Effort impels 
to effort — combination begets combination. 



Aggregated Capital 65 

New industries are built up — new markets are 
opened— new methods of manufacture are in- 
vented. It is the law of life. By each striving 
to get ahead, all make progress. 

Have prices been increased? On the con- 
trary, combination in business and low prices 
have ever gone hand in hand. Combination 
has never been so great as in the last twenty-five 
years and prices have never ruled so low. 

Has the individual been crushed out? To 
some extent undoubtedly as a solitary individual. 
But he has found a larger sphere for his efforts 
through association with other individuals. 
No day has ever equalled to-day in business 
opportunities offered intelligent and industri- 
ous men. 

Has the wage-earner suffered ? On the con- 
trary, new avenues of labour have been opened, 
the demand for labour, particularly skilled 
labour has increased; wages are higher, the 
cost of living lower and the condition of the 
labouring man was never so good as to-day. 

With such a quarter of a century of experi- 
ence of the advantage of association in busi- 
ness behind us, the man who still fears that 
combination will destroy competition, pro- 
duce high prices and lessen wages, would have 
feared a conflagration during Noah's flood. 

Let me refer more specifically, if you are 
not too tired of statistics, to the two branches 
of business in which combination is to-day 
the most effective. I learned from the statis- 



66 The Trust: Its Book 

tics of railways for the year 1890, prepared 
by the Interstate Commerce Commissioners, 
that the number of railway corporations in 
the United States is 1,558, with a total mileage 
of about 200,000 miles, of which 75 companies 
operate about 65 per cent. The total capital 
is about 10,000 millions of dollars. The total 
gross revenue is nearly 1,052 millions of dollars, 
of which 75 companies receive 80 per cent. 
Truly here is a combination and aggregation 
of capital undreamed of until modern days. 
What is the result? Although their gross 
earnings are 1,052 millions, their final net 
earnings are only 102 millions, of which 90 
millions are distributed in dividends. Of their 
gross earnings, about 230 millions are required 
to pay interest. That is, about 720 millions 
annually or three-fourths the gross income 
goes for labour and for materials into which 
labour enters, while only 320 millions goes to 
capital. This expenditure of 700 millions 
annually is what the railroads do for the 
labourer directly. They do still more indi- 
rectly by furnishing the means of travel and 
transportation and cheapening the cost of 
products. For* passengers the average revenue 
is 2 and 167 thousandths cents per mile; the 
actual cost of service is 1 and 917 one-thou- 
sandths cents per mile, leaving 21-2 mills pro- 
fit per mile for each passenger. The revenue 
per ton of freight per mile is 941 thousandths 
of a cent, and the cost 604 thousandths, leaving 



Aggregated Capital 67 

a profit of 337 thousandths of a cent per ton 
per mile. The revenue per train per mile is 
$1.65 and the cost $1.05, leaving a profit of 
60 cents per train per mile. 

You will admit that the effect of such low 
prices in cheapening products must be great, 
and that there is no way of getting those 
charges much lower except by some invention 
or arrangement which will still further reduce 
cost of service. The transportation by rail- 
road to-day costs some 800 million dollars 
less annually than the same amount of trans- 
portation would have cost twenty years ago. 
The flour and meat you eat is brought from 
west of the Mississippi River to your city at a 
cost of transportation scarcely more than it 
costs you to have a carriage from the station 
to your door. Wheat is raised in Dakota, 
milled in Minnesota, carried to Boston and 
baked in the large bakeries at a total cost of 
three and one-half cents per pound for bread. 
Yet poor bread baked in small shops, is sold 
to the poor at six cents per pound. The cost 
is nearly doubled after capital has done its 
part. The cost of railway service does not 
amount to one-half cent per pound, the cost 
of retailing is five times that. The railways 
carry meat from Kansas to New York at one 
cent per pound. The added cost to the con- 
sumer after it leaves the railway is five to ten 
times the railway charge. The country is con- 
vulsed by a slight rise in coal, perhaps justly 



68 The Trust: Its Book 

so. But the poor of New York who buy coal 
in small lots pay from ioo to 200 per cent, 
above wholesale prices. The economy of the 
future will be largely in the saving of waste in 
retailing, which averages 20 per cent, of the 
price the consumer pays. Aggregated capital 
may be used to advantage in that direction. 

My other illustration is the oil business. 
About 1872 oil refiners began to combine to 
save themselves from ruin. Oil was then sell- 
ing at 23 1-2 cents per gallon, and refiners 
losing money. The output was 248,000,000 
gallons. The first great saving was in trans- 
portation. Crude oil is now carried in pipe 
lines from the wells to the principal cities and 
to the seaboard. The total length of these 
pipe lines and their feeders exceeds 25,000 
miles. These pipes deliver in New York above 
1,250,000 gallons per day. After being refined 
it is transported in bulk cars and bulk steamers. 
By means of tank wagons it is delivered to re- 
tailers in the principal cities of America and 
Europe, in some cases is so delivered even at 
the customers' doors. This not only reduces 
cost of transportation to its lowest point, but 
largely eliminates cost of packages, which is 
almost equal to cost of contents. The tanks, 
pipes, vessels, cars, etc., of this system have 
cost over $50,000,000. Without this aggrega- 
tion of capital the system was impossible. The 
refineries and manufactories of barrels, boxes, 
cans, sulphuric acid, glue, paint, etc., have 



Aggregated Capital 69 

cost nearly $50,000,000 more. The direct 
result of this aggregation of capital is that the 
actual cost of manufacturing not only oils, but 
all that enters into the manufacturing of oils, 
has been reduced from 50 to 66 per cent. 
Ordinary export oil is sold to-day at less than 
four cents per gallon, and the total consump- 
tion of crude oil is over thirteen thousand 
million gallons per year. The saving to the 
public on the amount sold as compared with 
the price in 1872 is over $150,000,000 per year, 
not including the saving resulting from the 
reduction in the price of the crude product in 
consequence of its increased production. 

The benefits of this reduction in cost are 
greater than the mere cheapening of the pro- 
duct. It is the means of saving the American 
oil trade. Russia can produce oil enough to 
supply the world, and its crude product can 
be supplied much cheaper than ours. It 
already disposes of 1,200,000,000 gallons per 
annum. Were it not for our pipe line system, 
our tank steamer system, our cheap methods of 
refining and of manufacturing all necessary 
materials, we could not hold our export trade 
for a single year. That export trade in 1892 
amounted to over 667 million gallons, of the 
value, at the extremely low prices of that year, 
of over $45,000,000. 

While careful economy is necessary to pro- 
duce these results, it is found that economy 
requires the selection of intelligent workmen 



70 The Trust: Its Book 

and the payment of good wages, by which 
alone ean good work be secured. The best 
machinery is of little use without human in- 
telligence, skill, care and faithfulness, and 
large industries find that these are qualities 
they can afford to pay for. The wages paid in 
the petroleum industry are from 15 to 20 per 
cent, above the average, and this is not the 
least of the reasons why the product can be 
made so cheaply. Economists who believe in 
the "wage fund" theory should make a note 
of this fact. 

Every employe has also a chance to im- 
prove his condition. To a great extent the 
managers, superintendents and others on high 
salaries are chosen from the ordinary workmen. 
There is scarcely a man connected with the in- 
stitution from the president down who did not 
begin as a clerk or workingman. 

It is a matter worth noting that in any joint 
stock industry, employes have the privilege, 
of which they avail themselves largely, of be- 
coming shareholders interested in the profits. 
Thousands become thus interested who could 
have no hope of carrying on business for them- 
selves, or of becoming members of a partner- 
ship. Employes are thus stimulated to greater 
diligence, care and interest in the work. Strikes 
are not known in establishments carried on in 
this manner. 

I know that there are persons in this audi- 
ence who want to get up and "jaw back," 



Aggregated Capital 71 

They want to ask, why is it, if all you have 
said is true, that there are still thousands of 
poor, thousands out of employment? Why 
is it that the centres of commerce and of manu- 
factures are also centres of pauperism and 
misery? Why is it that while the capitalist 
lives in his palace, workmen herd in slums and 
hovels? Has aggregated capital banished 
suffering and want? Has it given to every 
man a fair chance or even a hope in life ? 

I wish I could answer these questions satis- 
factorily. My object has been to show what 
capital has done and what it is capable of 
doing, not to claim that it can cure all the 
evils and inequalities of life. Neither do I 
claim that it has not left much undone. I 
assert that capital is a necessary factor in all 
the progress we have made, and that, just in 
proportion as capital is aggregated and business 
concentrated, more labour is demanded, greater 
wealth is produced, wages are increased and 
prices are diminished. I have tried to show 
by history the untruthfulness of the utterance 
of Karl Marx that " capital is the spoliation of 
labour," of Proudhom that "all property is 
theft," and of Henry George that "nature 
gives property to labour, and to nothing but 
labour." I hope I have shown that it is not 
true in countries which have grown rich by 
production and not by plunder that as the 
"rich become richer, the poor become poorer, " 
"that wealth accumulates while men decay." 



72 The Trust: Its Book 

It is a fair inference from what has been said 
that to be rich is not necessarily a crime, that 
poverty is not in itself a virtue, and that there 
may be at least one road to Heaven which does 
not lead through the poorhouse. 

Why is there still so much poverty? One 
reason is because nature or the devil has made 
some men weak and imbecile and others lazy 
and worthless, and neither man nor God can 
do much for one who will do nothing for him- 
self. If people are content to live in dirty 
tenement houses or miners' shanties — to supply 
with alcohol the want of good food and proper 
clothing — to leave their children uneducated 
and their daughters to find amusement in dance- 
houses; if they are content, or even consent, 
to work for barely sufficient to supply them 
with barbarous needs, they will find the work 
and the wages suited to their wants. If em- 
ployers are willing to deceive the public with 
shoddy productions and defective work, they 
will also find the poor and cheap workmen 
they want. But as capital is aggregated in 
larger sums this evil will decrease. When 
millions are risked in a business this kind of 
work will not do. To make a business perma- 
nently successful there must be good work, 
good wages and good workmen — men of brains 
who will not strike at the dictation of a walking 
boss nor poison the food of the so-called scab 
who is willing to do honest labour. And as 
concentration of capital goes on there will be 



Aggregated Capital 73 

more and more demand for such workmen, 
while the idler, the bungler, the vicious, the 
saloon soaker, all who have "yearnings for 
equal division of unequal earnings, " and who 
curse capital and the men who have earned 
and saved it, will be less and less in demand 
and will sink lower and lower in the social and 
moral scale. 

It is true that our great commercial and 
manufacturing centres are centres of poverty 
as well as of wealth — of all that is bad as well 
as of all that is good. Here, however, is a 
fact worth noting. Seventy-five per cent, of 
the labouring classes of our great cities are 
foreigners, not from the factories and work- 
shops of England, but from the Continent; 
from countries where labour is largely manual 
and individual; from lands where the labourer 
is and has been the poorest and most degraded ; 
where wages are the lowest and the methods 
of living equally low. Poor as is their condition 
here, it is better than it was at home. Go 
through our city slums and you will find that 
the vilest and most degraded are found at work 
in the sweater dens and other tenement-house 
industries. There is no aggregated capital in 
Essex street or among the Bohemian cigar- 
makers. There the employer is generally as 
poor as the employes. The next lowest class 
of imported workmen scatter through the 
country as agricultural labourers, the poorest 
paid, possibly, of all labour, and this because 



74 The Trust: Its Book 

farmers' profits are small. The farmer cannot 
avail himself of the benefits of association and 
aggregated capital, and he suffers accordingly. 
The condition of labourers at our mines is 
shamefully bad. This is largely a kind of 
labour in which the best workmen will not 
engage. In many manufacturing towns also 
the condition of workmen is a reproach to 
civilization. But it is generally worst in the 
small factories. Small capital, business done 
on credit and high interest make low wages, 
low workmen and bad work. Just in propor- 
tion as industry is rightly organized, the neces- 
sary capital invested, and a large trade sought 
for by means of intelligence, economy and 
small profits, will this condition of affairs be 
improved. So far from aggregated capital 
bearing the blame for these evils, it is the 
remedy. 

I admit that aggregated capital has not 
cured and cannot cure all the misery and in- 
equalities of life. Will you tell me what can? 
Will putting all industry into the hands of the 
government do it? What, then, will become, 
I will not say of the industries, but of the gov- 
ernment? The patronage it already dispenses 
tests its justice, if not its strength, to the last 
tension; what will it be when that patronage 
is multiplied a millionfold? The government 
will then be governed by a Tammany organiza- 
tion on a national scale. Then we would have 
cause to sigh for the good old times. 



Aggregated Capital 75 

Will an equal distribution of all the wealth 
produced, including the rents of lands, cure 
everything? There is not and never has been 
enough wealth produced in the world to ma- 
terially better the present condition of its in- 
habitants. There is not enough wealth in 
existence to meet the world's necessities for 
two years. If the rents of all lands were dis- 
tributed equally it would not amount to 
three cents per day per head. If the surplus 
income of employers was annually distrib- 
uted among the labouring classes it would 
not appreciably better their condition, while 
it would bring trade to a standstill for 
want of capital to carry it on. Of the wealth 
now produced, workingmen get 90 per cent., 
so Edward Atkinson claims, and of the 10 per 
cent, saved and set aside which becomes capital 
workingmen save and own one-half. It is the 
remaining five per cent, in a few hands which 
makes the millionaires and causes so much 
apparent inequality. The only hope for a 
better future is in the creation of a greater 
amount of wealth by means of the improved 
use of natural forces, more perfect machinery, 
more effective methods of manufacture and 
distribution, greater utilization of the present 
waste of time, labour and material, and in the 
aggregations of capital necessary to accomplish 
these results. Nature has enough in store 
to give all men what they need when once man 
fully understands her powers and resources, 



76 The Trust: Its Book 

and has command of the capital necessary to 
utilize them. There is enough now produced 
to give every individual a decent living who 
does not already enjoy that luxury, provided 
all waste was stopped, and much of the waste 
and useless expense of trade can be stopped by 
concentration of industries. 

It is urged that aggregated capital makes 
some persons extremely rich. To this the plea 
must be, guilty. But what harm is done if A, 
B and C do become extremely rich, provided 
they grow rich not by plunder, not by specula- 
tion, not by stock manipulation, not by corpora- 
tion wrecking, or the other forms of robbery 
mis-called business, but by organizing and 
carrying on industries ? They create the wealth 
which makes them rich and get but a small 
part of it. If the eighty million dollars ac- 
cumulated by Jay Gould was acquired by 
railway construction, and not otherwise, he 
benefited the public while he enriched him- 
self. If it should now be divided among the 
labourers of this country, in one year that 
enormous capital with all its possible benefits 
would vanish like the morning mists. Should 
it, however, be used in increasing and cheap- 
ening transportation, or in increasing and 
cheapening production, it would continue to 
benefit the public for all the years it was so 
used. 

The world has by no means lost the benefits 



Aggregated Capital 77 

of or been injured by large capital in individual 
hands. It was the merchant prince, John 
Hancock, who, by his bold signature, first 
pledged his life and fortune for the independence 
of his country. It was the fortune of Robert 
Morris that saved the liberties of this land at 
the expense of sending him to a debtor's prison. 
Such fortunes are poured out by millions for 
the good of the unsuccessful and unfortunate. 
They build our hospitals, our universities, our 
colleges, our technical and art schools, our free 
libraries. Used in this way, or in carrying on 
industry, great fortunes are among our great- 
est blessings. 

It is also true that combinations and aggre- 
gated capital confer advantages and place the 
individual who works alone at a disadvantage, 
thus producing inequalities. Perhaps this is to 
be deplored, but if aggregated capital did not 
give advantages there would be no good in it. 
If the use of steam did not confer advantages 
it would not be used. Admitting, however, 
that it confers advantages, by what right will 
you undertake to deprive anyone of its use? 
Shall I be prevented from doing the best I can, 
and from calling to my aid association, steam, 
machinery and every other labour-saving and 
wealth-producing appliance, because my neigh- 
bour cannot or will not avail himself of the 
same advantages? How soon would progress 
go upon halting feet if this principle prevailed ? 
If those who push forward are held back none 



78 The Trust: Its Book 

will go forward. Every advance hurts some- 
one, but thousands are helped. The spinning 
jenny destroyed the spinning wheel, the power 
loom the hand loom ; canals injured transporta- 
tion by wagons ; railroads injured canals ; petro- 
leum injured the whale fishery; electricity 
supplants gas. Always the more perfect in- 
jures and supplants that which is less perfect, 
and those who are quickest to possess them- 
selves of the better methods outstrip their 
fellows. Inequalities are created but progress 
is gained by inequality, not by forced equality. 
Advantages and inequalities must be blamed 
on old mother Nature as well as on capital. 
Show me a community where all men are on a 
level, where no man is more successful than 
another, no one richer than another, and I will 
show you a community stagnant, idle, semi- 
barbarous, and on the verge of starvation. 

The last objection I will mention is that the 
power given by aggregated capital may be 
abused. This no one can deny. Whatever 
is capable of good is capable of evil. Every 
force may be used for destruction as well as 
for production. Fire burns, water drowns, 
the air wrecks ships and cities, steam explodes, 
electricity kills. Shall we abolish these forces, 
or shall we control and utilize them? The 
powers of government, of law and of the church 
have been abused. Shall we therefore abolish 
government, law and church? Religion has 



Aggregated Capital 79 

been made a cloak for vice, faith has at times 
degenerated into bigotry, charity is the cause 
of much of our pauperism. Shall there, 
therefore, be neither religion, faith nor 
charity ? 

Like other forces of industry, association 
and aggregated capital have done harm and 
are undoubtedly capable of abuse, but that 
man is blind to all that history has taught, 
and doubly blind to all that reason is capable 
of teaching, who claims that they therefore 
should be destroyed, or their power for good 
limited. 

If there is one thing that history teaches 
plainly it is that abuses are soonest reduced to 
a minimum by permitting, not by restricting, 
industrial liberty. Give all equal opportuni- 
ties and business will regulate itself on honour- 
able lines. I do not prophesy an era of per- 
fection. The golden age of the future is a 
mirage as the golden age of the past is a myth. 
There will always be beggars on our corners, 
tramps on our roads, debauchery in our saloons, 
corruption in our politics, injustice and dis- 
honesty in our business. But men whose in- 
tegrity is such as to permit them to be en- 
trusted with the management of large capital, 
whose intellectual grasp of principles and de- 
tails is such as to command with their products 
the markets of the world, are those who will 
soonest realize that the policy which succeeds 



80 The Trust: Its Book 

is that which accords fair treatment to all, be 
they competitors, consumers or employes; 
that there is nothing so sharp or shrewd as 
honour; that nothing wins like justice; that 
the well-being of one depends upon the well- 
being of all. 



CHAPTER III 

THE GOSPEL OF INDUSTRIAL 
STEADINESS 

Charles R. Flint 

The time is past when it is necessary to 
argue as to the right of existence of large ag- 
gregations of capital, for the purpose of in- 
dustrial development. Every great move- 
ment in the world's progress has been opposed. 
Machinery has done more to benefit labour 
than all the acts of reformers and governments ; 
yet originally the class most benefited en- 
deavoured to prevent its use. While com- 
binations of wealth, of judgment, of experi- 
ence and of executive ability are now generally 
recognized as a natural evolution in industrial 
development, all reflective men appreciate 
that, as mistakes have been made in the de- 
velopment of other great institutions, in the 
State and even in the Church, so mistakes 
have been and will be made in the organiza- 
tion and management of industrial enterprises ; 
and at this time, when so many industrial cor- 
porations are being organized, it is important 
that we should compare views in order to 
minimize mistakes. 

Fortunately the capitalization of most of 

81 



82 The Trust: Its Book 

the industrial corporations which have re- 
cently been formed has been clearly defined, 
and has been based principally upon the earn- 
ings for the years during which " America 
has been wearing her old clothes." Business 
is active to-day and promises to be more so 
to-morrow. Profits are large, and for the 
near future must continue to be so. Add to 
this the advantages which will accrue from 
economies and other benefits secured by con- 
solidation, and statements of profit will be 
rendered which will have a tendency to turn 
men's heads. The wise managers of large 
industrial corporations will charge off sub- 
stantial amounts for depreciation, and in- 
crease the surplus out of the unusual profits 
resulting from increased demand and de- 
creased cost of production. 

In my judgment, the danger point will be 
reached when new capitalization is created 
based upon the abnormally large earnings of 
this period of prosperity, and an undue ad- 
vance in the quotations of existing securities 
takes place, in consequence of unexpectedly 
favourable statements of profits. The most 
successful railroad companies — combinations 
that have stood the test of time, the best ex- 
amples of the advantages of aggregated wealth 
and intelligence — -have increased their reserves 
in good times, so as to be in a position to pay 
dividends in hard times. 

At the close of the period of depression 



The Gospel of Industrial Steadiness 83 

from 1873 to 1878, I noticed that, after some 
months of improvement, many conservative 
men sold their securities, and the people who 
purchased them made money because there 
was continued prosperity. After two years 
had elapsed there was a general feeling that 
prosperity had become permanent, and the 
men who had shaken their heads when the 
mercury in the financial thermometer was 
only one-third of the way up, departed from 
their conservative policy when it reached the 
top and argued that reactions such as had oc- 
curred in the past could not recur; that the 
political system had been perfected; that the 
wealth of the country had enormously in- 
creased ; that the conditions of business activity 
were firmly established; that continuous eco- 
nomic development was inevitable. And if 
we could recall the names of those who in- 
vested at that time in the securities of the 
companies organized to parallel the New York 
Central, we should find in the list the very 
pillars of conservatism. The result reminded 
me of the remark of Larry Jerome when the 
guide pointed out the Coliseum as "the 
greatest ruin in the world." "He evidently 
has never heard of Pacific Mail, ,, said 
Jerome. 

Industrial corporations, properly organized 
and well managed, because they can buy, 
manufacture and distribute more cheaply than 
their weaker and less able competitors, have 



84 The Trust: Its Book 

an inevitable and a necessary advantage in 
the world's markets, and are sure to prosper. 
But I am equally certain that there will ulti- 
mately be a reaction from the present period 
of unusual business activity. The vital point 
at this time is to see that industrial corpora- 
tions are organized and managed upon sound 
business principles, and not to rush into over- 
production and thus to create the conditions 
of inflation which result in reaction and panic. 
What should be preached is the gospel of 
steadiness. The new corporations are large 
enough and controllable enough to make for 
steadiness in a way that would have been im- 
possible under the old conditions. They can 
in case of need be made the instruments of 
economic safety, just as the clearing houses 
have been made the instruments of financial 
stability. 

The time when a check will be most needed 
will be at a later period, when favourable re- 
turns resulting from the advantages of con- 
solidation, added to the profits made in time 
of great prosperity, will cause industrial shares 
to be much more in fashion than they are to- 
day, when corporations will be looked upon 
by the speculative public as affording excep- 
tional opportunities for stock market profits. 
When we reach the almost inevitable period 
of inflation and boom, the result will be reac- 
tion ; and there will be danger of a crash. Then 
all of us should have in mind '93 and '96, 



The Gospel of Industrial Steadiness 85 

when, to quote C. P. Huntington, "Every man 
who had two shirts was in trouble. " 

In the organization and management of 
industrial corporations there are certain dan- 
gers. One is the jeopardizing at the outset 
the most valuable asset of an industrial con- 
solidation, namely, the good- will of the suc- 
cessful companies included in the consolida- 
tion. Each company, by years of honest 
dealing, has established relations of confidence 
with its customers, who are satisfied with its 
methods. The danger comes when, upon the 
completion of the consolidation, some en- 
thusiastic member of the newly formed execu- 
tive committee, carried away by the theories 
of centralization and believing himself to be 
a Napoleon of Industry, attempts to centralize 
the business too rapidly and too dictatorily, 
thereby destroying existing organizations, in- 
juring the good-will, and endangering the 
whole. But experience has proved that in 
such cases we can usually rely upon the rare 
common sense of the hard-headed practical 
men who have built up the industry. The 
greatest care should be taken in organizing 
new consolidations to retain the services of 
such men. In several industrial consolida- 
tions with which I have been associated, I 
have urged at the beginning that the individu- 
ality and independence of the successful con- 
cerns should be sustained, that the endeavour 



86 The Trust: Its Book 

should be to bring the standard of all up to that 
of the best, and not to centralize the business 
in such a way as to destroy the good-will. 

Another disadvantage: While the financial 
interest of the individual entrusted with the 
local management of a sub-company or plant 
is as large in amount as before, his percentage 
of interest, owing to its being merged with 
other concerns, is very much less, and the 
inducement of exertion and economy is not 
as large as before. In the export and import 
business we are able clearly to divide our 
business into departments, according to coun- 
tries or staples, interesting each head in the 
department which he manages. Here the 
departments are independent. But in case 
of the consolidation of manufacturing cor- 
porations, such an arrangement is very diffi- 
cult, as there is likely to be a conflict of interest, 
owing to their interdependence. It is there- 
fore undesirable to have any individual inter- 
ested otherwise than in the common result. 

An offset to the disadvantage of a reduced 
percentage of personal interest is accounta- 
bility through accurate monthly comparisons 
of methods and results between the several 
plants. Managers are very ambitious to have 
their work compare favourably with that of 
others. The manufacturer thus has the ad- 
vantage of comparisons with co-workers in 
the same line; every improvement is for the 
benefit of all, and manufacture and methods 



The Gospel of Industrial Steadiness 87 

of distribution are brought to the highest state 
of efficiency and economy. 

In studying the industrial situation, it 
seems to me well for us to take advantage of 
the experience of London, where the capitaliza- 
tion of manufacturing concerns commenced in 
a large way before it was undertaken in the 
United States. I find that the amount of the 
capitalization of industrials in England has 
aggregated two thousand millions of dollars. 
In many cases the capitalization has consisted 
in putting in form for investment private 
businesses, instead of consolidating many com- 
panies into one large corporation, as has re- 
cently been done in this country. The two 
thousand millions of English industrial securi- 
ties have been, as a rule, most satisfactory 
investments, and have averaged more profit- 
ably than most others. Their failure has 
been the exception. 

In this country, in addition to getting the 
advantages of putting private businesses into 
corporate form, we are obtaining the benefits 
of consolidated management. We thus secure 
the advantages of larger aggregations of capital 
and ability. 

If I am asked what these are, the answer is 
only difficult because the list is so long. The 
following are the principal ones : — raw material, 
bought in large quantities, is secured at a lower 
price; the specialization of manufacture on a 
large scale, in separate plants, permits the 



88 The Trust: Its Book 

fullest utilization of special machinery and 
processes, thus decreasing cost; the standard 
of quality is raised and fixed; the number of 
styles is reduced, and the best standards 
adopted ; those plants which are best equipped 
and most advantageously situated are run con- 
tinuously in preference to those less favoured, 
in case of local strikes or fires the work goes 
on elsewhere, thus preventing serious loss; 
there is no multiplication of the means of 
distribution — a better force of salesmen takes 
the place of a large number; and the same is 
true of branch stores; terms and condition of 
sales become more uniform, and credits through 
comparisons are more safely granted; the 
aggregate of stocks carried is greatly reduced, 
thus saving interest, insurance, storage and 
shop-wear; greater skill in management ac- 
crues to the benefit of the whole, instead of a 
part; and large advantages are realized from 
comparative accounting and comparative ad- 
ministration. 

Such are some of the advantages of consoli- 
dation. The grand result is, a much lower 
market price, to the benefit of consumers both 
at home and abroad, and brings within their 
reach classes and qualities of goods which 
would otherwise be unobtainable by them. 
This is the great ultimate advantage; and if 
this were not sooner or later true, if the world 
at large did not ultimately reap the benefit, 
the other advantages would be as nothing. 



The Gospel of Industrial Steadiness 89 

The severest test of a business system is in 
times of adversity. Under the conditions 
which prevailed before these large aggrega- 
tions of wealth and intelligence, each manu- 
facturer in times of depression rushed in to 
secure as much as possible of the reduced 
volume of business ; the result was demoraliza- 
tion. 

Under industrial combination, however, each 
concern obtains its fair share of the reduced 
volume of business at fair prices; and the 
contraction of business is conducted with the 
orderliness of a retreat of a well-disciplined 
army. Nothing in the past has more demoral- 
ized industries than over-production in times 
of prosperity, and the scramble for a market 
in times of adversity, with resulting cutting of 
prices to an extent necessitating the reduction 
of wages and the manufacture of inferior, I 
might say, counterfeit goods. Such competi- 
tion instead of being the life of trade is the 
death of trade. It results in failures among 
jobbers, manufacturers, and suppliers of raw 
material, even affecting that favoured class, 
the bankers. In the long run the consumer 
is unfavourably affected by these conditions. 
The goods he buys, though apparently cheap, 
are inferior in quality ; and he suffers as all do, 
from disorganization. 

The change from two hundred million dollars 
excess of imports of manufactured goods in 
1 89 1, to sixty million dollars excess of exports 



90 The Trust: Its Book 

during the past year, a difference of two hun- 
dred and sixty million dollars in our favour, 
has been principally owing to the development 
of economic manufacture through combination. 
Over eighty per cent, of our exports of manu- 
factured goods are being produced by such 
organizations while supplying the domestic 
demand, and, to a very large extent, manu- 
facturing the implements and machinery, which 
in spite of our high wages has enabled our 
farmers to take advantage of the world's 
markets. The only way in which the United 
States can extend and hold its position in the 
world's markets for manufactured goods is 
by securing the advantages of highly developed 
special machinery, which is only possible 
through centralized manufacture and aggre- 
gated capital. Subsidy-seekers claim that 
"Trade follows the flag"; merchants know 
that trade follows the price, and the flag 
follows the trade. 

The wars of to-day are industrial wars; 
wealth is secured by production instead of by 
plunder; diplomats devote most of their time 
to studying trade conditions for the benefit of 
their home industries; and the most favoured 
treaties are those of reciprocity and commerce. 
We might as well expect to win the industrial 
battles of to-day by old methods, as to expect 
victory with old types of war vessels, manned 
by men who, as Joe Jefferson said, "Had 
never had any rehearsals," against those 



The Gospel of Industrial Steadiness 91 

modern combinations of steel, electricity, pow- 
der and dynamite handled by men who have 
rehearsed, and directed by an experienced ex- 
ecutive committee presided over by an Admiral 
Dewey. 

In the centralization of manufacture, the 
people at large are receiving great benefits, 
not only through lower prices for products, but 
by the opportunities offered for investment 
in the shares of industrial corporations. In- 
comes were being seriously impaired through 
the reduction of interest, and opportunities 
to invest in manufacturing properties were 
restricted. Now incomes can be increased 
through judicious investment in industrial 
shares. In ten years from now there will be 
fifty times as many people interested in manu- 
facturing investments as there were ten years 
ago. The trend of the times is centralization 
of manufacture and wide distribution of the 
profits. 

The wages of the American workman can be 
sustained only by our keeping in the lead in 
the development of labour-saving machinery 
through centralized manufacture. He must 
be placed and held in the position of an over- 
seer of machines. To-day the productive 
capacity of the labour-saving implements and 
machinery of the United States more than 
equals that of a population of 400,000,000 not 
using labour-saving devices. It requires the 
intelligence of the American workman to direct 



9 2 



The Trust: Its Book 



these labour-saving implements and machines. 
No other condition would justify the payment 
of overseer's wages, which the American wage- 
earner is receiving to-day. Man-power, under 
these conditions, has given place to machine 
power ; and the man, instead of being a machine, 
a mere hand-worker, daily becomes more and 
more a brain-worker and more and more a 
man. This, more than any other single fact, 
accounts for the increased prosperity of our 
people, their larger leisure, larger liberty and 
larger enjoyment of life. 

It is a fact that the larger industrial cor- 
porations require the best workmen, and are 
to-day distributing in wages the largest sum 
of money so paid anywhere in the world, and 
at higher rates. One of our political leaders 
of national importance is reported to have said 
recently, that organizing large industrial cor- 
porations was " good business but bad politics. " 
He was compelled to recognize that they were 
distinctly within the lines of economic progress 
and of benefit to the whole community. By 
"bad politics" he meant that the so-called 
1 'trust" issue, though in reality a false issue, 
could nevertheless be raised to create discon- 
tent in certain quarters. 

The reply to this is, that such organizations, 
the basis of our increasing industrial prosperity, 
stand not only for good business, but good 
politics. So long as they are well and success- 
fully developed on conservative lines, giving 



The Gospel of Industrial Steadiness 93 

constant employment to the entire community 
at advanced rates of wages, with lower prices 
for all articles consumed, and greater oppor- 
tunities for increased profits to investors, it 
will be impossible for even the wildest dema- 
gogue to show that "good business" is "bad 
politics." 

The vital questions of to-day are economic 
ones, and the politicians would do well to 
study arithmetic. The political party that 
opposes or even fails to recognize and applaud 
the present industrial development, the promi- 
nent feature of our prosperity, has no more 
chance for permanent success than if it based 
its hopes upon advocating laws that would 
result in paying the American wage-earner 
fifty-cent pieces in lieu of dollars. 

Compare the condition of our people with 
that which prevailed before the aggregation 
of wealth and intelligence in the development 
of industries, when wealth was obtained by 
conquest, not by industry; when the present 
necessities of the masses were luxuries only 
for the rich. By such a comparison we realize 
that the emancipation proclamations of human- 
ity were written by Watt and Arkwright, 
Stephenson and Fulton, Franklin and Morse, 
Bessemer and the great organizers who have 
applied their discoveries and distributed the 
benefits of their inventions to the whole world. 



CHAPTER IV 

COMBINATIONS AND THE PUBLIC 

James J. Hill 

There is in the community a general feeling 
of hostility towards the railroad and industrial 
consolidations that have been effected and 
towards those that are now under way. This 
hostility is strong, but undefined. Much of 
it has come, undoubtedly, through the teachings 
of the newspapers, and, in a measure, through 
the speeches of political orators. It began 
when the " trust" came into being and as the 
result of an effort to obviate ruinous competi- 
tion. The " trust" was found a very cumber- 
some structure, and the law of the land de- 
clared it illegal. It was not a consolidation in 
any sense of the word, and differed entirely 
from the business scheme under which the 
consolidations of to-day are being effected and 
operated. Under the " trust" system the 
stocks of various and competing organizations 
were trusteed into the hands of a few men, 
to whom was given absolute and unqualified 
power to do what they saw fit with the proper- 
ties placed under their control. It was not on 
its face a healthy arrangement, and it met with 
violent opposition on all hands. 

95 



96 The Trust: Its Book 

The new system in force to-day is neither 
illegal nor, so far as our experience thus far 
has shown, harmful to the community. But 
the people at large have not yet learned to 
distinguish between the new and the old, and 
the odium attaching to the " trust" is visited 
on the consolidation. The old scheme left in- 
tact all the corporations it found in existence. 
In the nature of things, no economy in produc- 
tion could be effected. All the old officers of 
the individual organizations remained. Cer- 
tain plants were shut down to restrict the out- 
put, but this process affected only the working- 
men who were thrown out of employment. 
The high-salaried men continued to draw 
their pay, and large bonuses were paid regu- 
larly to the stockholders or owners of the 
plants that had been put out of business. In- 
creased profits, therefore, could generally be 
obtained only by an increase of price for the 
product, which was saddled on the consumer. 
Under the new system, a different usage pre- 
vails. Operating expenses are reduced by 
combining a number of institutions under one 
management. Useless officers and unproduc- 
tive middlemen are cut off. The systems of 
purchasing and distributing are simplified. 
Economies are effected by the direct purchase 
of material in large quantities, or, better still, 
by adding to the combination a department 
for the acquisition and the control of the 
sources from which raw material is drawn. 



Combinations and the Public 97 

Thus, the Carnegie Company, which was the 
highest type of this system, took its iron from 
its own mines, made its coke in its own ovens, 
worked up its material in its own furnaces, 
and shipped the finished product over its own 
railroad or in its own vessels. In the great 
Krupp Iron Works, of Germany, this system 
has been in operation for two generations; 
and, instead of arousing public antagonism, 
the Krupps have the admiration and good will 
of the entire German nation, from the Emperor 
down. 

What has just been effected in the great 
steel combination is simply an enlargement of 
the Carnegie plan, and, when the value of the 
great properties combined is taken into con- 
sideration, the capitalization of one thousand 
million dollars is not exorbitant. The Carnegie 
Company by itself was a colossal institution, 
so colossal that it dominated the steel market 
absolutely. But because it happened to be a 
single company, its tremendous proportions 
aroused no particular opposition. It was con- 
sidered a fine, healthy enterprise, as it should 
have been considered, and Mr. Carnegie and 
his partners were not looked upon in any sense 
as "trust" magnates. While hostilities to 
many other concerns were raging at their 
fiercest, the organization of the Carnegie 
Company was not once impugned by the anti- 
consolidationists. 

From all accounts, the workmen of the Car- 



98 The Trust: Its Book 

negie Company were among the best paid 
artisans in America. The company could 
afford to pay high wages, because its men 
worked under the most perfect and compact 
conditions. Nothing was wasted, nothing of 
the earnings went to middlemen, who are mere 
leeches sucking sustenance from the business 
body without giving anything in return. 

In the nature of things, a plant bought out 
or added to the Carnegie Company's proper- 
ties became, by the mere fact of such addition, 
greatly more valuable than it possibly could 
have been under independent management and 
control. There was lopped off at once the 
item of executive expenses. There was no 
president's salary to pay, no vice-president's, 
no office force. The purchasing agents, with 
their salaries and commissions, became things 
of the past. The product was worked up in 
the most scientific and economical manner 
and put on the market under the best condi- 
tions. 

The point sometimes made, therefore, that 
a factory worth $50,000 to-day is necessarily 
improperly rated at $150,000 to-morrow, be- 
cause it has been combined with others under 
one managerial head, has not all the force that 
might appear from the bald statement of the 
facts. A property is not necessarily worth 
only what it represents in the way of real 
estate, building and plant. It is worth rather 
what it represents in earning capacity; and, if, 



Combinations and the Public 99 

under a combination, its earning capacity is 
trebled, because of the economy of production, 
it is not unreasonable to say that its value has 
been trebled, even though nothing tangible 
has been added to its material assets. Hard 
and fast rules do not apply to the value of any- 
thing. A piece of property worth $1,000 to- 
day may be worth $2,000 to-morrow, merely 
because some improvement has been made in 
the neighbourhood which adds to the rental 
value of the property in question. Lands 
showing evidences of iron deposits, which, ten 
years ago, could have been bought for .ten 
dollars per acre, or even less, are now worth 
$50,000,000. Not cost, but earning power, 
is the measure of value. This fact is exempli- 
fied every day in almost every community in 
the country; and no man would dream of 
protesting against the increased valuation, or 
object to the placing of a loan at such increased 
valuation. It is a business proposition and 
must be treated as such. 

On the other hand, many properties are not 
worth the price that was paid for them, though 
they may have been extensively improved. 
English agricultural lands represent to-day 
a far higher type of farming than ever they did 
before, but they are not worth nearly as much 
as they were twenty-five or fifty years ago. 
The opening of the great West here in America 
has given the English farmer a competitor 
whom he cannot meet on an even plane. In 

lLofC. 



ioo The Trust: Its Book 

consequence his land, though it has lost none 
of its productiveness, is worth very much less, 
because the market value of its produce is 
worth less. 

The feeling existing against consolidations, 
as I said before, is undoubtedly general, but 
investigation will prove that it is almost in- 
variably unreasonable. That is to say, as an 
open proposition, the majority of the people 
will declare themselves against these consolida- 
tions, say they are bad for the country and 
speak of the danger that lurks in the "trust" — 
as they still call it, though it no longer is a 
"trust" in any sense. But they are rarely 
able to give any specific reasons for their 
belief. 

There are a few men — that is, comparatively 
few — in the community who can advance good 
reasons for their opposition. They are the 
ones who have been caught between the upper 
and the nether mill stones ; they are the middle- 
men, and the small competitor who was unable 
to meet the larger concern in the open market. 
To them, consolidation has been a distinct in- 
jury. This is apparent, and, under our social 
and business system, inevitable. The aim in 
business, as in politics, is to do the greatest 
good to the greatest number; and the greatest 
number — so far as we can now see — is appa- 
rently benefited by the consolidations. Al- 
most every improvement that helps the masses 
brings injuries to individuals here and there. 



Combinations and the Public ioi 

The building of a railroad into a new territory- 
puts the owner of the stage coach out of busi- 
ness. Trolley cars that have sprung up all over 
the country have done grave damage to the 
local hackmen and livery stable keepers. 
But the community which is brought into 
touch with the outer world by a new railroad, 
and the village or town that gains the advantage 
of cheap and quick transportation by means 
of the trolley car, are benefited so much more 
than the stage owners and hackmen are in- 
jured, that the balance is easily in favour of the 
improvements. 

In all such improvements the chief benefi- 
ciary is the workingman. The only asset he 
has to sell is his time. He cannot afford to 
pay a quarter for a hack ride, but when the 
trolley comes and he gets a quick ride for five 
cents, it is a good business investment for him. 
The rich man is not particularly affected by 
the appearance of the trolley. He still rides 
in his carriage. 

We are, as yet, only on the threshold of the 
new era in the business world, and no one can 
say positively that the present order of things 
is and will be for the best. That is still to be 
proven, and it can be proven only by time. 
All we can say is that, so far as we have gone, 
the results are certainly favourable. Against 
the alleged injury that is intangible, can easily 
be put the benefit that can be shown by figures 
— benefit to the workingman, benefit to the 



102 The Trust: Its Book 

consumer, benefit to the capitalist. Wages 
are higher, prices are lower, investments are 
safer, more productive and more certain of 
return. 

Where great consolidations have been effected 
there is no longer any danger of disturbance in 
the trade through the erratic action of an in- 
dividual owner. Strikes are much more re- 
mote where a general and uniform rate of pay 
is fixed by a central management. 

An excellent illustration of this was seen 
during last year's strike in the anthracite coal 
regions. There the general scale of wages was 
depressed because of the presence of a consider- 
able number of independent operators, who 
could not or would not pay their men as well 
as the big companies — the railroads — could 
pay, because the latter could look for profit both 
by mining the product and carrying it to market. 
Again, a settlement of the strike was delayed 
because the smaller operators felt they could 
not afford the increase agreed upon by the 
railroad mining company. The conditions in 
the coal region illustrate^ very forcibly the 
value to the workingmen of a condition where 
one corporation handles the product from be- 
ginning to end, thereby ensuring larger profits, 
of which it can afford to give its employees a 
part in the shape of higher wages and steadier 
employment. 

The workingmen benefit also in another 
direction, where the concern for which they 



Combinations and the Public 103 

work is backed by ample capital and has the 
benefit of concentrated management. They are 
assured the use of the most perfect machinery. 
A big concern can afford to make improve- 
ments and put in the latest machinery, because 
such improvements and machinery necessarily 
add to the productiveness of the plant at a rate 
that will soon make good the expenditure. 
The smaller concern, while it realizes this fact, 
is unable to avail itself of the latest appliances, 
because it has not the necessary capital to in- 
vest. 

Another advantage of prime importance to 
the workingmen is that they may easily par- 
ticipate in the profits of these enterprises by in- 
vesting their savings in the shares of the more 
solid and prosperous concerns. Over $2,400,- 
000,000 are deposited in the savings banks of 
the United States, largely made up of the 
savings of the wage-earners, and this repre- 
sents only a portion of their accumulations. 
With these vast resources at command, the 
workingmen of the country might, in a few 
years, acquire a large interest in the concerns 
in which they are employed. The opportuni- 
ties thus afforded for safe and lucrative in- 
vestment will enable them to share in the 
profits, and thus unite the rewards of capital 
and labour. 

The consumer is assured of lower prices 
when a big concern is the producer, because 
such a concern must have a steady market 



104 The Trust: Its Book 

for its output in order to keep its machinery 
busy. The loss of a day is a large item. There- 
fore, in self-defence the big concern must keep 
its prices within the figure that will secure the 
greatest number of purchasers. 

Moreover, if the result of these industrial 
consolidations is steadily and relatively to 
reduce the prices of their products, the gravest 
of the speculative popular objections to them 
will be obviated and public opinion will speedily 
recognize the benefits to the people at large 
of this new and improved machinery of pro- 
duction. The very motive of self-interest, 
even the law of self-preservation, dictates a 
policy which is as necessary to the lasting 
business prosperity of these concerns as to that 
popular approval without which they cannot 
permanently endure. 

This is the theory of the new business con- 
solidations; and their promoters, judging by 
the results attained so far, believe that it will 
work out — that it is a good policy and a wise 
one for everybody. Should experience prove 
that it is not a good condition for the people 
at large, it will very soon be upset. Politically, 
the scheme has never been passed upon as yet ; 
and, if it proves a good scheme, it may never 
be a distinct issue in politics. If the prosperity 
of the country (much of which, I believe, is 
due to the consolidations and economies 
effected so far) continues, the people will be 
content to let well enough alone. If, however, 



Combinations and the Public 105 

it is shown that we are on the wrong track, 
and that consolidations are harmful to the 
people in general, as has been so frequently 
stated, the question will undoubtedly be 
settled at the polls. 

There was much talk during the last Presi- 
dential election of the " trusts " and the " trust " 
issue; but, to my mind, it had very little in- 
fluence one way or the other with the voters. 
More pressing issues obscured it, and it was 
only a side affair, so that politically it is still to 
be settled, if the situation warrants. 

There is one thing that the people who deal 
lightly with the new business scheme, and who 
want to sweep it aside as a menace, forget. 
We have reached a stage in our national devel- 
opment where business must be done on a 
different plan from that which served us well 
half a century ago. In 1865, when the war 
closed, we had thirty-five millions of people; 
to-day we have over seventy millions. That is, 
we have doubled our population in thirty 
years. If we are advancing at the same rate — 
and indications point to the conclusion that we 
are — we will have over one hundred and fifty 
millions in 1935. In other words, we are 
adding at the rate of one and a half to two 
millions a year to our population. Thirty- 
five years ago, or even ten years ago, horse- 
cars served admirably the purposes of urban 
transportation. To-day, we could not possibly 
get along without the trolley. And as it is with 



106 The Trust: Its Book 

physical conditions, so it must be with eco- 
nomic conditions; we must keep pace with 
the times. We have reached a period when 
the old-fashioned methods will prove inade- 
quate, if the masses of the people are to con- 
tinue in the enjoyment of the prosperity to which 
they are entitled. There are too many people 
to be fed, housed and clothed to permit of the 
wasteful system which would maintain a 
horde of idle middlemen. People in this 
country live better to-day than they ever did 
before in their lives. This is due, I believe, 
very largely to the improved methods of pro- 
duction. There are fewer drones in the hive, 
fewer people who share the results of work 
without doing any work themselves. 

All progress is the development of order. A 
uniform method is the highest form of order. 
The benefit accruing to the people, and the 
extent of their progress, will be in proportion to 
the extent of the application of uniform 
methods to the production of what they re- 
quire. 

In railroading, consolidation so far has 
worked as satisfactorily as it has in other lines 
of business. Operating expenses have been 
very materially reduced by combining proper- 
ties, and thus cutting down the list of high- 
priced officers. Where there were half a 
dozen or a dozen presidents, each drawing a 
big salary, within a certain territory, the rail- 
roads have been put under one management, 



Combinations and the Public 107 

and we have one president, who can easily do 
the work of all the others, and do it on one 
salary. It is a curious thing, in this connection, 
that, while the protests against consolidation 
have generally come from men and news- 
papers who talk as the special representatives 
of workingmen, the real hardship of consolida- 
tion, if there is any, has fallen upon the men 
who drew fancy salaries, and did very little to 
earn them. These men were generally stock- 
holders in the concerns in which they held 
office. Every small railroad that began no- 
where and ended at the cross-roads, had its 
president, vice-president and so on, all of 
whom, under the new order of things, have 
disappeared. These men were essential under 
the old order. In many cases, they were the 
builders of the roads, big and little, that have 
been merged; but their usefulness has ceased 
and they are now victims of the new conditions 
created by our ever-increasing population. 
They were the men, very often, who created 
good, healthy competition. But the day for 
such competition — in railroads, at least — has 
pretty well passed away in this country. We 
now have railroads enough to insure the hand- 
ling of all reasonable traffic, and to add in- 
discriminately to the mileage would simply 
increase the cost of this handling. It would 
benefit nobody. Indiscriminate railroad build- 
ing is the worst possible thing for the public, 
in a well-settled community where the roads 



io8 The Trust: Its Book 

in existence are sufficient for the traffic. The 
public in the end pays the cost. A railroad 
must either earn the money to operate it, or 
else borrow. In either case the expense is 
saddled on the people. If there are two lines 
where one line will suffice, the added burden 
falls on the public. 

In Europe, where the population is dense, 
this fact has long been recognized, and the 
paralleling of a railroad is forbidden by law. 
Good service can only be given by a road that 
is making money. A road operated at a loss 
will inevitably run down, and the people who 
are compelled to use it will be the chief sufferers. 

The road that can give the longest haul in 
its own cars over its own lines, can make the 
lowest rates, and yet earn more money than 
could be made on a haul of the same length when 
the cars have to run over half a dozen lines, 
each separately operated by a staff of expensive 
officials. If, at the end of the haul, the rail- 
road can transfer the goods or passengers from 
its own cars to its own steamships for carriage 
across the ocean, the process is continued. 
Having no separate company and office organi- 
zation to be supported out of the earnings of 
the steamships, it can give better service for 
less money than its competitor less fortunately 
situated. That is a self-evident business propo- 
sition. 

There is no longer danger of an unjust 
squeezing of the public by the railroads through 



Combinations and the Public 109 

exorbitant rates. The law of the land dis- 
tinctly provides that the charges a railroad 
makes for freight or passenger traffic must be 
"reasonable." Now, what is a "reasonable" 
charge? It is based entirely on the cost of 
operation and maintenance, and its relation to 
the value of the property used. In this item 
are included the payment of interest on bonds 
and a fair return, in the shape of dividends, to 
the stockholders. 

If there are two roads to be maintained and 
operated where there is use for only one, the 
traffic must somehow be made to bear the 
burden, and the basis of the "reasonable rate" 
is necessarily raised. Competition for traffic 
may force a temporary reduction, but, ulti- 
mately, the public must make up its mind to 
foot the bill. 

Where rate wars are precipitated, the injury 
to the people along the line is about as great 
as it is to the railroads. This is true particu- 
larly in the smaller towns, which are at a con- 
siderable distance from the great distributing 
centres, and where, therefore, freight rates 
have a determining influence on the prices of 
commodities. The rate wars unsettle values, 
and the business man knows hardly from day 
to day where he stands. One merchant may 
be put to a heavy loss because he has brought 
in a big consignment of goods at one rate, while 
his neighbour across the way brings in his con- 
signment the next day at a much lower figure. 



no The Trust: Its Book 

Stable and reasonable rates are absolutely 
necessary to the consistent well-being of the 
community. There was a time, perhaps, when 
railroads gouged people at non-competitive 
points, but that time has passed. Both busi- 
ness prudence and the law now regulate these 
things. Therefore, railroad consolidation, with 
its more economical operation, means as much 
to the advantage of the producer and the 
consumer as it does to the stockholder of the 
road. Each will share with the other in the 
result — the one in the shape of more ''reason- 
able" rates, and the other in more certain 
dividends. 



CHAPTER V 

THE TRUST: AN ALLIANCE OF WORK, 
BRAINS AND MONEY 

Charles R. Flint 

A combination of labour is a trades union ; a 
combination of intelligence a university; a 
combination of money a bank; an industrial 
combination is a combination of labour, in- 
telligence and capital — work, brains and money. 

There seems to be much confusion in the 
minds of the people as to the difference between 
a trust and an industrial company, due to the 
fact that those who talk most about them are 
not yet well informed, either as to their organi- 
zation or operation. A trust was a syndicate 
of men who held stock certificates of several 
corporations and issued trust certificates there- 
for. Now, industrial interests are represented 
by shares of stock in regularly organized com- 
panies. Although strenuous efforts were made 
to develop the trust system, it was found to 
be imperfect. It was adopted when industrial 
combinations were in their infancy. I have 
always been opposed to the trust system of 
organization. They were not required to have 
any by-laws or keep any official minutes of 

in 



ii2 The Trust: Its Book 

their proceedings, or to make any official re- 
ports. In general it might be said that they 
possessed great power without sufficient ac- 
countability. The Supreme Court of the State 
of New York declared them illegal, and every 
lawyer who is informed in regard to industrial 
organizations will tell you that that decision 
has been accepted as final throughout the 
United States. But the word "trust" has 
since been applied to great industrial corpora- 
tions; and as the word represents all that is 
best in human character, I see no reason why 
the word "trust" should not be adopted as a 
short name for industrial combinations. May 
every officer and wage-earner in every " Trust " 
realize that the shares of stock are widely dis- 
tributed among widows, orphans and others 
dependent on its dividends for support, and 
live up to the true meaning of the word. 

In studying the evolution of industrial life, 
we find that combination is coincident with 
civilization. Savages have little power to 
combine, because combination depends on 
trust in cur fellow man, and in primitive life 
it is fear that rules. One of the first steps in 
industrial evolution was to subdivide produc- 
tion into trades. Each did what he could do 
best, settling accounts by an exchange of pro- 
ducts. Later, those engaged in the same trade 
formed partnerships, then corporations, and 
finally consolidations of corporations. 

Against this march of industrial progress 



The Trust: an Alliance 113 

there has always been opposition. There have 
always been those who, appealing to special in- 
terests, to the unsuccessful, the discontented 
and the misinformed, have endeavoured to 
obtain political favour by opposing progress, 
by endeavouring to prevent the natural, and 
mutually beneficial, co-operation between capi- 
tal and labour. 

To-day there are men of intellectual re- 
finement and pleasing personality far removed 
from the centres of finance, commerce and 
industrial activity, who read of industrial life, 
but who are not in it; — who are studying the 
history of industrial progress, but are not 
making that history — and yet, as Bismarck 
said, "cursed with the dangerous gift of ora- 
tory, " they are advocating theories in business 
and finance that, if adopted, would shake the 
very foundations of our industrial existence. 
They are half-thinkers, because they think 
without the facts. They remind one of 
General Grant's most amusing after-dinner 
speech to the newspaper men of New York. 
He said: "A feeling of awe comes over me 
when I realize that I am in the presence of 
men of such marvellous capacity. Your rapid- 
ity of conception, your unerring judgment, 
seem supernatural. When I was before Rich- 
mond, surrounded by men who had made a 
life study of military tactics, when, after days 
and nights of deliberation a plan of campaign 
was finally determined upon, one of you would 



ii4 The Trust: Its Book 

get down to your office late at night and in a 
few minutes dash off an editorial telling how 
we were all wrong, and pointing out what we 
ought to do. Your remarkable versatility 
was shown in formulating legislation, and you 
were peculiarly strong in international diplo- 
macy where the existence of State secrets made 
it impossible for you to get at the facts. " 

In this great territory of ours we always 
have with us those who try to make people 
believe that their siding is the main track. 
We have had the "Know-nothing" craze, the 
"Greenback" craze, the "Granger" craze, 
and the "Silver" craze; but they were all re- 
jected by the good sense of the American 
people. To-day our farmers recognize that 
the markets of the world have been opened to 
them through the great systems of railways, 
which have resulted in the heavy steel rail, 
the eighty-ton locomotive, and the continuous 
haul. Economically the wheat fields of Da- 
kota are nearer to London and Paris than the 
farms of Yorkshire and Burgundy. Thus 
favoured, our farmers during the past few 
years have paid off so many mortgages that if 
ground into paper pulp, they would make 
ballots enough to elect a President. 

The men of sound judgment, leaders in the 
industrial wars for the supremacy of the 
American farmer, the American manufacturer 
and the American wage-earner, should not be 
disturbed by the clamour of those who, net in 



The Trust: an Alliance 115 

the struggle, cannot appreciate actual condi- 
tions, and whose leadership, if accepted, owing 
to their inexperience, would conduct us to 
inevitable disaster. 

Industrial evolution, which is as inevitable 
and as unalterable as the law of gravitation, 
has attained its highest development here in 
the United States. Every unprejudiced man 
must recognize its advantages, and that it is 
because of them that we are taking so im- 
portant a position in the world's markets, in- 
creasing our national wealth, furthering the 
welfare and increasing the prosperity of our 
people. 

The great problems of the economics of pro- 
duction have been solved. What interests us 
most to-day is not so much the fact of our 
great industrial prosperity; it is, rather, the 
question whether the advantages of that 
prosperity are equitably divided among the 
contributors to it: — 

(1) Capital, 

(2) Superintendence and 

(3) Labour. 

(1) The share to capital takes the form 
either of interest or dividends. 

We find that the rate of interest paid to those 
furnishing money to industrial enterprises is 
decreasing. Fifty years ago, the average rate 
throughout the United States was eight per 
cent per annum. Now it is less than five per 
cent. This general rule can be laid down : that 



n6 The Trust: Its Book 

the greater the confidence, the higher and 
more perfect the industrial organization, the 
lower the rate of interest. During the year 
1896 the stability of our currency and the 
fundamental conditions of our industrial devel- 
opment was regarded by many with doubt; 
and money loaned as high as twenty per cent. 
The investor is ever willing to take lower in- 
terest in exchange for greater security and for 
a steadier and less precarious demand for his 
funds. Thus that form of industrial organiza- 
tion which furthers careful financing, opens 
wider markets and guarantees greater confi- 
dence and stability, is directly in the interest 
of capital, although the rate of return on 
capital is thereby steadily reduced. 

The dividends received by shareholders are 
larger than the interest rates, because the risk 
is greater. Moreover, being partners and share- 
holders, they are entitled to a larger share in 
the advantages of combination. Still it is 
doubtful if the aggregate of dividends is as 
large as the aggregate of interest. Dividends 
are never absolutely certain, and they are 
never paid until labour and superintendence 
have first had their share. 

(2) What is the position of the man of 
superior intelligence? for superintendence 
stands midway between capital and labour. 

Highly developed organizations, resulting 
in enormous volume of business, have increased 
the necessity for intelligence. As the supply of 



The Trust: an Alliance 117 

brains is not equal to the demand, the price of 
brains is high. The turning over of individual 
businesses to combinations has caused the 
retirement of old men to the advisory board 
for judgment, and has made way for young 
men for action. You ask, "What chances 
have our young men?" While you are asking 
the question, those of ability and energy have 
already started on a career of successful indus- 
try. If the student will leave his books and 
the orator his stump and go to our factories, 
to our great farms, to our mines, to our lines 
of railways, they will find ten times as many 
men receiving over $3,000 per annum as there 
were thirty years ago. 

Mr. Schwab, of Pittsburgh, is a type. He 
started as a stake driver of an engineering 
corps. To-day, though under forty years of 
age, he is president of the largest iron company 
in the world. I can point out a hundred 
successful men to-day where you could not 
have named ten under old conditions. 

But, it is said, they are dependent. De- 
pendence upon each other is however the con- 
dition of civilization. The very word civiliza- 
tion implies community life, and community 
life means mutual dependence. Complete in- 
dependence is found only in the wigwam of the 
Indian. There the young man builds his own 
house, makes his own clothes, gets his own 
meat, and keeps his bank account, if he has 
any, in his pocket. The best opportunity he 



n8 The Trust: Its Book 

has for distinction is in showing superior 
prowess in hunting, or superior strength in 
paddling his own canoe. In civilized life, 
interdependence is more profitable than in- 
dependence. Your young man, instead of 
paddling his own canoe, can command one of 
those great combinations, which is doing so 
much to benefit the world — the modern steam- 
ship. Was Captain Clark less the commander 
or Chief Milligan less the engineer, because 
each was dependent on the other in making 
the historic run and the splendid fight of the 
Oregon? Each gave to the other his oppor- 
tunity. One might just as well say that a man 
has no opportunity in political life because we 
have a police system and no man can do as he 
pleases. On the contrary, just as a good 
system of national police is a guarantee of liberty 
so these great organizations are guarantors of 
opportunities which otherwise would never 
exist. 

Let us not waste time in considering who will 
take care of these young men of superior in- 
telligence; they will take care of themselves. 
The Almighty has given the greater power to 
superior intelligence, and as Samuel J. Tilden, 
one of Nature's great monopolists in the do- 
main of intellect, has said: "You cannot 
substitute the wisdom of the Senate and As- 
sembly for the plan of moral government 
ordained by Providence." 

(3) Let us now consider the interests of the 



The Trust: an Alliance 119 

workingman in this economic evolution which 
has produced the perfect machinery and giant 
factories, supported by great aggregates of 
capital represented by shares which enable all 
to become investors. It is a fundamental fact 
that the man of superior ability cannot accu- 
mulate for himself without giving to the wage- 
earners an opportunity to earn the larger 
share, and it is always an increasing share. 

The tendency to-day is to a minimum of 
profits and to a maximum of wages. When 
profits become abnormal, they invite compe- 
tition, and are immediately reduced. In which 
case the consumer alone is benefited. If they 
are not sufficiently abnormal to invite com- 
petition, then labour demands a larger share 
of the profits in the form of increased wages ; 
and it is either voluntarily or necessarily 
agreed to. In this case, the body of wage 
earners reaps the advantage; and, inasmuch 
as the body of wage-earners is the great body 
of the community, the community is benefited. 
Employees know almost as promptly as do the 
employers, whether a mill is earning an ex- 
travagant profit. If it is, they at once de- 
mand their share, and the employer must 
inevitably yield. It is thus that wages always 
tend to a maximum, and profits to a minimum. 

The maintenance of the high standard of 
wages now paid in the United States is abso- 
lutely dependent upon our realizing the ad- 
vantages which come through superior organi- 



120 The Trust: Its Book 

zation. We are to-day shipping manufactured 
goods to countries where the rates of wages 
average forty per cent, less than our wage- 
earners are receiving. Of our exports of 
manufactured goods, eighty per cent, are pro- 
duced by large industrial corporations. Ar- 
ticles of manufacture which we do not produce 
through consolidations are being almost en- 
tirely supplied to the neutral markets by the 
cheap labour countries — Germany, Belgium 
and England. The centralization of manu- 
facture and consequent use of special machinery 
have emancipated the slave — have raised the 
American workman to the position of over- 
seer, not of pauper labour, but of its produc- 
tive equivalent, machinery. And he is re- 
ceiving, and is entitled to, the wages of super- 
intendence. The intelligent labour leaders 
understand this perfectly. It was my pleasure 
to entertain at my home some of the best 
known of these. Speaking of labour condi- 
tions, I asked one of them to define the differ- 
ence between his organization and that of the 
professional agitators. He replied : " We hope 
to bring about by evolution what they claim 
should be accomplished by revolution." They 
said that they "welcomed new machinery, 
because it did the work which had heretofore 
degraded labour." 

The wage-earners of the United States are 
to-day enjoying a higher standard of living 
and a larger measure of well-being than wage- 



The Trust: an Alliance 121 

earners have ever before enjoyed in the history 
of the world. They are the real money power. 
The railroad managers have rails and rolling 
stock; the miner has mines; the manufacturer 
has bricks, mortar and machinery, and most 
of them have debts, and many are mortgaged 
to the banks for savings ; but the wage-earners 
in the United States have on deposit in 
cash in the savings banks, subject to 
call, two thousand five hundred millions of 
dollars. 

Thus through co-operation and combina- 
tion every interest is being benefited, labour 
most of all. As wage-earners become more 
intelligent, as they become overseers of ma- 
chinery, they better understand these condi- 
tions. They have the intelligence to recog- 
nize that their greatest comfort and happiness 
is in furthering the industry of which they are a 
part. To-day one of the great advantages 
that the United States has over Europe is that 
its labourers are the more intelligent, are the 
healthier and happier. The European wage 
earner, instead of welcoming labour-saving 
machinery as our workingmen in the United 
States have done, has tried persistently to 
retard its general use. The result has been 
that wages have been lower in Europe. The 
American workman has received more because 
he has produced more. This is the great 
reason why, notwithstanding our high wages, 
we are so rapidly extending our trade with 



122 The Trust: Its Book 

foreign markets. The best factory inevitably 
gets the most work. There is a continual 
struggle for existence between good factories 
and poor factories, and the good factory in- 
variably wins. 

The law of consolidation of capital and 
division of labour holds as good in the field of 
distribution as in that of production. It is 
inevitable and it is profitable. The depart- 
ment stores and the mail order stores sell for 
ten per cent, instead of thirty per cent, profit, 
and the consumer thus saves twenty per cent. 
The profit obtained by the distributor of 
staples, on the way from the farmer to the 
consumer, is less than one-quarter what it was 
thirty years ago. The farmer secures a wider 
market, the consumer gets his staples much 
more cheaply, and the enterprising middleman 
has improved banking and transportation 
facilities to do a larger business. This is 
why he has adopted as his motto, "Quick 
sales and small profits." 

The real benefits of " capitalistic production, " 
as compared with production on a small scale, 
are twofold. The first and greatest benefit 
of industrial combinations goes to the whole 
body of the community as consumers, through 
reduction in prices. The next benefit, and 
that next most largely distributed, goes, as I 
have shown, to the workers through increase of 
wages, and thus it happens that the working- 
man gains simultaneously in two ways. He 



The Trust: an Alliance 123 

gets more money for his work and more goods 
for his money. 

Having reviewed the position of our great 
consolidated corporations as the results of an 
economic evolution, something should be said 
with regard to their capitalization. In general 
there has been much greater conservatism in 
the capitalization of industrials than there 
was in the original capitalization of railroads. 
Our railroads were built principally for the 
amount of the bond issues, and the stock repre- 
sented the capitalized hopes of the projectors. 
The issues of industrial bonds have been con- 
siderably below the actual value of the tangible 
assets, and industrial stock issues have gener- 
ally been based on actual earning capacity. 
Still it undoubted that there has been more 
than one instance of marked over-capitaliza- 
tion of industrials, and no proper legislative 
measure to remedy this wrong or prevent its 
recurrence should be neglected. 

Fortunately, the evil caused by careless 
investing and unwise capitalization tends to 
correct itself by natural laws. Investors, 
confused by the few inflated industrials which 
were put out simultaneously with the sound 
ones, are afraid to buy, and the organizers, 
unable to sell their securities, now realize that 
sound capitalization is the best policy. 

In organizing industrial companies, pre- 
ferred stock, which is intended for an invest- 



124 The Trust: Its Book 

ment security, should not be issued in excess 
of tangible assets, except in special cases where 
there is a very large earning capacity protected 
by very valuable patents or trade-marks. 
Verified earnings and regular dividends will 
establish confidence; and the prices of the 
shares in the well-organized and well-managed 
Industrials will advance as did the stocks of 
railroad companies which were originally is- 
sued for good-will. 

In taking a comprehensive view of the or- 
ganization and operation of industrial com- 
binations, we cannot close our eyes to the fact 
that in the evolution of industrial progress, as 
in all human affairs, there are imperfections 
and abuses for which it is our duty to try to 
find a remedy. But we should not permit 
those desirous of gaining political advantage 
to exaggerate these imperfections to such an 
extent as to blind us to the fact that it is 
through industrial combinations we are able 
to pay high wages and continue our prosperity. 
They would have us confine our vision to a 
dead tree in the landscape instead of looking 
all around the horizon. It is such narrow- 
minded men who at times talk against our 
form of government because some of its de- 
partmental machinery does not work to entire 
satisfaction. 

While believing in great organizations ; while 
knowing that they are a necessity if this country 
is to remain a great power in the economic 



The Trust: an Alliance 125 

world and thereby continue the prosperity of 
the wage-earners of the land, I do not believe 
in large aggregations of wealth in the hands 
of individuals unfitted to wisely administer 
them. 

Wealth is a serious trust, and when left to 
those who lack experience in the use of it, is 
often a curse instead of a blessing. Money 
does us good only as we part with it. There 
could be no great benefactions without great 
fortunes. After providing a reasonable com- 
petency for one's family, the greatest satis- 
faction that can be obtained with money is 
to build up educational institutions, to help 
our aspiring young men to help themselves. 
Under corporate ownership this can be done 
without liquidating or contracting great busi- 
ness organizations whose influence is so far- 
reaching that they may properly be called 
great business universities. Such organiza- 
tions should be sustained and improved, in 
justice to the wage-earners and managers who 
have assisted in building them up, and the 
investors who are dependent on their dividends 
for support. 

One of the features of our industrial situa- 
tion is that many of the men who have built up 
these great organizations are retiring. Those 
men who have blazed the way in this new 
and rapidly developing country have been the 
ablest industrial leaders the world has ever 
known, such men as Carnegie and Huntington, 



126 The Trust: Its Book 

Rockefeller and Field, Armour and Vander- 
bilt — the thinkers, the doers, the organizers — 
men whose creations are the great land-marks 
in our industrial history. It is fortunate that 
we have had such leaders. They did their 
work with the aggressive force that comes of 
natural energy and temperate living, and with 
the judgment that comes of experience. They 
have understood and have been in sympathy 
with the people because they have been of the 
people, and the example of these men, rising 
from the ranks, gives impulse, encouragement 
and high aspirations to every workingman in 
the land. They made their fortunes by re- 
ducing the percentage of profits and increasing 
the volume of business; by reducing the rate 
of freight on a barrel of flour to the Atlantic 
from $3.00 to 45 cents ; by reducing the price of 
steel from $100 per ton to $20; by improving 
the quality and reducing the price of provisions 
and of by-products, while paying a higher price 
to the farmer for the animal; by reducing the 
price of oil from 30 cents to 10 cents; by re- 
ducing the price of cotton cloth from 20 cents 
to 5 cents. They realized that, in order to 
make their combinations a grand success, they 
must increase consumption by reducing prices. 
Thus they not only helped to develop a great 
home trade, but enabled us to open the door of 
foreign markets, resulting in the enormous 
trade balance in our favour, on which our pros- 
perity so largely depends. 



The Trust : an Alliance 127 

The industrials to-day are owned by the 
many. While economic evolution is central- 
izing production in large corporations, de- 
centralization of ownership goes on simultane- 
ously through the rapid distribution of shares. 
There are many hundred times more partners 
in manufacture, mining and railways than there 
were thirty years ago, and the number is 
rapidly increasing. Women rarely had an 
opportunity of obtaining an interest in busi- 
ness organizations. Now they are large share- 
holders of corporations, and as such they have 
the full right of suffrage. 

Under the old conditions of private owner- 
ship, the control of many of our industrial 
enterprises would have been inherited by one 
individual or family. Now the control is 
subject to the same rule that prevails in the 
administration of our State, and that is the 
rule of the majority. It is seldom, and fortu- 
nately so, as preventing great aggregations 
of wealth in the hands of individuals or fami- 
lies, that the heirs of industrial giants have 
the capacity to succeed to the direction of 
gigantic enterprises. Many inheritors of great 
fortunes, enervated by ease and luxury, prefer 
a life of indolence, or to chase the will-o'the- 
wisps of society; others prefer to devote their 
time to literature or art; others to enter upon 
scientific pursuits. Under the old conditions 
they would have inherited the control of in- 
dustries, but under the present conditions of 



128 The Trust: Its Book 

industrial consolidation, the majority of the 
stockholders — for generally speaking, the nu- 
merical majority is also the majority in interest 
— elect as officers aspiring young men who 
have proved their ability and judgment to 
assume the responsibilities of leadership. Ow- 
ing to the higher evolution of our industrial or- 
ganizations these men are developing greater 
intelligence and superior ability to those who 
have preceded them. Thus the fittest sur- 
vive. 

In life nothing is stationary; contraction or 
expansion goes on continuously, and if you 
don't expand you contract. It is so with 
nations: Spain contracts; the United States 
expands. So it is with industry. There are 
periods of expansion when the mills are run- 
ning full, and there are periods of contraction 
when the number of unemployed is large. 
Confidence is at the foundation of expanding 
business activity. The amount of business 
transacted on credit is over two thousand 
times that transacted in exchange for gold or 
silver. If there is confidence, the manufac- 
turer employs many hands, the labourers pur- 
chase more, the retailer buys more goods, the 
jobber orders more from the manufacturer, 
the manufacturer to still further increase his 
output, employs more hands, and every man 
who wants work can find it. This is pros- 
perity. 

Lack of confidence causes contraction. The 



The Trust; an Alliance 129 

manufacturer is afraid to make many goods, 
discharges some of his labourers; they pur- 
chase less; the jobber cancels his orders; the 
manufacturer must still further reduce his pay- 
roll. The result is "hard times." 

Nothing better proves how sensitive confi- 
dence is than the holding up of business because 
of the remote possibility of legislationwhich may 
conflict with natural laws. In 1896, the dis- 
cussion as to changing our financial, legal and 
industrial systems, created sufficient uneasiness 
to cause our bank clearings to decline twelve 
per cent, in comparison with the corresponding 
months of the previous year. It caused an 
enormous advance in interest rates, and threw 
out of work a whole army of men and women. 
You are all familiar with the change which 
took place in 1897 when conditions became 
assured — how renewed confidence set the wheels 
of prosperity in motion, a result which every 
one familiar with industrial conditions then 
predicted. If the mere possibility of unwise 
and immature financial and industrial legisla- 
tion caused such a panic as that of 1896, what 
a terrible cataclysm would be occasioned if, 
instead of the possibility, we were confronted 
with the actuality. The difference would be 
that between the storm and the cyclone. On 
the other hand, remove all questions as to the 
sanity and conservatism in our laws, as to the 
stability of our currency, as to the continuity 



130 The Trust: Its Book 

of our industrial development in accordance 
with natural laws, and we shall enjoy a condi- 
tion of prosperity such as no other country in 
the world has ever known. 

When we entered upon a period of prosperity 
in 1897, it was after convalescing from a 
period of severe contraction. Now we are 
producing gold at the rate of one and a half 
millions a week, and have a balance of trade 
in our favour of over one and a half millions 
a day. Our exports of manufactured goods 
have been forty per cent, more during the past 
two years than during the previous two years, 
and the balance of trade in manufactures has 
amounted to more during the past four years 
than during the previous existence of the 
Republic. 

Owing to the mistrust in 1896, we were 
obliged to appeal to Europe for financial help. 
We were compelled to borrow money at high 
rates of interest. During the past four years, 
owing to our undisturbed industrial develop- 
ment, we have exported the products from 
farm and factory to such an extent that the 
balance of trade in our favour has amounted 
to two billions of dollars, which makes us a 
great factor in foreign commerce and a world 
power in finance. England, Russia, Germany 
and Sweden have come to us for money, and 
the credit of the United States Government is 
higher to-day than that of any other nation. 
When all doubt is forever removed as to the 



The Trust: an Alliance 131 

perpetuity of our gold standard, the American 
eagle will inevitably become the unit of inter- 
national exchange in place of the English 
sovereign. 

In view of the fact that the maintenance of 
high wages in the United States is largely 
dependent upon our increasing exports, the 
question is asked whether we could sustain 
them in competition with the cheap labour of 
China, were China to become a manufacturing 
country. The best answer is that in one year, 
among our other exports, we have shipped 
two hundred million yards of cotton cloth 
to the Chinese. The average rate of wages 
paid by us in its manufacture was seven times 
the average rate of wages prevailing in China. 

The Chinese, like the people in our own 
country who have a Chinese cast of mind, do 
not recognize the advantages of combination. 
Industrially they are living in the land of yes- 
terday, instead of in America, the land of to-day 
and to-morrow. Notwithstanding her great 
agricultural and mineral wealth, notwith- 
standing the fact that she has the largest body 
of cheap labour in the world, China is not an 
efficient competing factor in the field of pro- 
duction because, in spite of all these facilities, 
she has none of the antecedents, intellectual, 
political, financial or mechanical for large scale 
production under modern conditions, since 
she possesses none of the instruments of com- 
mercial greatness and social well-being. 



132 The Trust: Its Book 

Twenty centuries of stationary policy and of 
looking backwards have made political pro- 
gress and economic development impossible 
for China. She has remained in industrial 
infancy. Lacking industrial organization and 
all that goes with it in the way of production 
on a large scale aided by large aggregations of 
capital and under conditions which attract 
and ennoble the greatest abilities, her agri- 
cultural and mineral wealth and her cheap 
labour cannot save her. She is left utterly 
behind in the economic race and her vast 
territories are now threatened with partition 
among the European powers. 

Our contractionists would practically have 
us put a wall around the United States which 
would reduce wages and prevent the working 
out of our destiny as a world power in com- 
merce, in finance and in the greater and nobler 
field of doing our part in the advancement and 
civilization of mankind. 

Situated as we are, between the great oceans, 
combining the strength of a great land power 
with that of a great sea power, we are pushing 
our way across the Pacific as we have already 
done across the Atlantic. But this increase 
is small compared with the increase that is 
destined to take place when no question is 
being raised as to the stability of the founda- 
tions on which rests this great industrial 
prosperity. With our untold natural resources, 
with our inexhaustible supply of metals and 



The Trust: an Alliance 133 

coal, with our great forests, with every variety 
of soil and climate, with the most industrious, 
most intelligent and most contented of peoples 
working under the best conditions of modern 
methods, we are destined to become the eco- 
nomic masters of the world. 



CHAPTER VI 

INFLUENCE OF THE TRUST ON 
PRICES 

Francis B. Thurber 

A further evolution in the organization of 
industries by the formation of "a Trust of 
Trusts" in the steel industry, with a capital 
approximating a billion of dollars, has given 
fresh occasion for discussion of the so-called 
"Trust" question, and has increased the al- 
ready large number of citizens who fear evil 
from such consolidations. There is a wide- 
spread impression that " Trusts" result in un- 
reasonable prices, through which the many 
are taxed for the benefit of the few, and it may 
be interesting to inquire how far this impres- 
sion is confirmed by the facts — not single and 
sporadic facts, but facts which cover a sufficient 
time and a sufficient field to indicate the general 
tendency. Let us, then, examine their effect 
upon prices, as indicated in the following 
statistics taken from United States Govern- 
ment reports. 

I. 

The first great organization of industry in 
the United States was the consolidation of 

135 



136 The Trust: Its Book 

railway lines, and its effect upon the prices of 
transportation is shown in the following table : 

AVERAGE RECEIPTS PER TON PER MILE OF LEADING RAIL- 
ROADS IN 1870, 1880, 1890 AND 1899, INCLUSIVE. 

Railway Lines. 1870 1880 1890 1899 

Cents. Cents. Cents. Cents. 

Lines East of Chicago 1.61 0.87 0.63 0.51 

West and Northwest Lines . 2.61 1.44 1.00 0.92 

Southwestern Lines 2.95 1.65 1.11 0.93 

Southern Lines 2.39 1.16 0.80 0.62 

Transcontinental Lines 4.50 2.21 1.50 0.99 

Average 1.99 1-17 0.91 0.70 

This result has been attained largely through 
combinations and consolidations, which, con- 
trary to the impression generally entertained, 
have not resulted in abolishing competition, but 
rather in economies of operation and improve- 
ment in service, accompanied by a steady re- 
duction in rates. Railway freight rates in the 
United States are less than one-half those of 
other principal countries. Our railways carry 
our chief products one thousand miles to 
our seaboard for less than the railroads 
of other countries charge for carrying these 
products two hundred miles inland from the 
seacoast after they have crossed the ocean. 

Passenger rates have not declined as largely 
as freight rates, but there has been a material 
decline in passenger rates also in the period 
covered by the above statistics, while the qual- 
ity of the service has been greatly improved, 
with a corresponding increase in its cost to the 
railways. 

The railroad of twenty years ago, with its 



Influence of the Trust on Prices 137 

equipment, would not be tolerated to-day. 
How many of us appreciate the privilege of 
stepping into a parlour on wheels and being 
hurled through space at the rate of forty miles 
an hour, with as much safety as if we sat in 
our drawing rooms or were sleeping in our 
beds at home ? 

II. 

The next great "Trust" was the Standard 
Oil Company, and its influence on prices is 
evidenced by the following statistics: 



PRICES OF REFINED ILLUMINATING OIL, PER GALLON, 
EXPORTED FROM THE UNITED STATES. 1871 TO 1902* 



Year. 

1871 

1872 

1873 

1874 

187s 

1876 

1877 

1878 

1879 

1880 

1881 



Cts. 
25. 7 
24.9 
23.5 
18.3 
14. 1 
14.0 
21. 1 
14.4 
10.8 

8.6 
10.3 



Year. 
1882 
1883 
1884 
1885 
1886 
1887 
1888 
1889 
1890 
1891 
1892 



Cts. 
9 

8 
9 
8 



Year. 

1893 

1894 

189S 

1896 

1897 

1898 

1899 

1900 

1901 

1902 



Cts. 
4.9 
4.2 
4-9 
6.8 
6-3 
5-7 
5.6 
7-8 
7-6 
7.2 



This decline in the price of oil is attributable 
partly to the increase in production, but more 
largely to improvements in manufacture and 
transportation, which were only attainable 
through the aggregation of capital in this in- 
dustry , 

III. 

The next great "Trust" in the order of for- 
mation was the American Sugar Refining Com- 

* The prices represent the market value of article at 
the time of exportation. 



138 



The Trust: Its Book 



pany, or the ''Sugar Trust," a corporation 
formed under the laws of the State of New 
Jersey for the purpose of consolidating the 
sugar-refining interests of the country. Until 
recently, when additional capital flowed into 
this channel, it did about eighty-five per cent, 
of the sugar-refining business in the United 
States. The tendency of prices under its in- 
fluence is shown by the next two tables, giving, 
respectively, the average price of both raw 
and refined sugar, with the differing margins, 
during the nine years prior to and the nine 
years immediately following its consolidation 
in 1887: 

Centrifugals, Granulated, Difference 

Raw, per lb Refined, per lb. Per lb. 

Year. Cents. Cents. Cents. 

1879 6.93 8.81 1.88 

1880 7-88 9.80 1.92 

1881 7.62 9.70 2.08 

1882 7.29 9-35 2.06 

1883 6.97 8.6s 1.86 

1884 5. 29 6.75 1.46 

1885 5.19 6.53 1-34 

1886 5.52 6.23 .71 

1887 5.38 6.02 .64 

Average, nine years 6.43 7.98 1 . 55 



For nine years after the formation of the 
"Trust," prices were: 

Centrifugals, Granulated, Difference 

Raw, per lb. Refined, per lb. per lb. 

Year. Cents. Cents. Cents. 

1888 .5-93 7-i8 1. 25 

1889 6.57 7.89 1.32 

1890 5.57 6.27 .70 

1891 3-92 4.65 -73 

1892 3.32 4-35 1.03 

1893 ...3.69 4.84 I- IS 

1894 3.24 4.12 .88 

1895 3.23 4.12 .89 

1896 3-62 4.53 -9i 

Average, nine years 4 . 34 5-33 -98 



Influence of the Trust on Prices 139 

Since 1896 prices have been affected by 
changes in the tariff, and more recently by 
increased competition, consequent upon the 
construction of new refineries, which at times 
have reduced margins to an absolutely unre- 
munerative point. 

The figures for succeeding years are as follows : 

Centrifugals, Granulated, Difference 

Raw, per lb. Refined, per lb. per lb. 

Year. Cents. Cents. Cents. 

1897 3-56 4.50 .94 

1898 4.24 4.97 .73 

1899 4.42 4.92 .50 

1900 4.57 5.32 .75 

1901 4°9 5. 04 .95 

Average five years 4.17 4.95 .77 

This reduction in price to the consumer has 
been effected, partly by increased production, 
and largely through buying the raw material 
more cheaply than when a large number of 
separate refiners were competing for the pro- 
duct. Large economies were also effected by 
closing inferior plants and enlarging and ex- 
tending superior ones. The American Sugar 
Refining Company has bought its raw material at 
cheap rates, but it has given the public the 
benefit of such purchases, merely retaining as 
its profit about one-third of a cent per pound, 
which, considering the nature of the business, 
is a reasonable one. It employs more labour 
and pays higher wages than were employed and 
paid before the organization of this industry. 

In the three years preceding the formation 
of the "Trust," twelve sugar refineries failed, 
throwing thousands of operatives out of em- 



140 The Trust: Its Book 

ployment. There is such a thing as unreason- 
able competition as well as reasonable compe- 
tition. The first drives the selling price of the 
article so low as to be incompatible with living 
profits, humane hours, honest wages and good 
quality. The organization of industry is a 
protest against unreasonable and destructive 
competition. The nine refineries consolidated 
into the " Trust" had twenty-seven partners; 
now the "Trust" representing these nine re- 
fineries has over 11,000 partners in the form 
of stockholders. Is this consolidation or dis- 
tribution ? 

IV. 

Among the more recent organizations is the 
"Paper Trust," known as the International 
Paper Company, organized in 1897. The 
contract prices of ordinary newspapers for ten 
years covering a period before and after its 
formation afford interesting material for study. 

CONTRACT PRICES FOR NEWSPAPER PAPER FOR TEN YEARS. 
Cents, Cents, 



Year. per lb. 

1890 3.61 

1891 3.12 

1892 3.12 

1893 2.90 

1894 2.75 

1895 2.40 



Year. per lb. 

1896 2.35 

1897 2.18 

1898 2.02 

1899 2.00 

1900 2.50 



Notwithstanding the advance which, owing 
to the increased demand, has taken place since 
1899, prices for paper are far below those of ten 
years ago, and it is safe to say that neither the 



Influence of the Trust on Prices 141 

tariff nor trusts have had any appreciable effect 
upon the price of paper. 

The prices above quoted are the lowest con- 
tract prices from first hands. Jobbing prices 
are somewhat higher; and, on an advancing 
market, jobbers sometimes advance their prices 
unduly, and lay the blame on ' "trusts," when 
the trusts have had nothing to do with the ad- 
vance. 

V. 

The latest and, according to many journalis- 
tic utterances, the most startling of the trust 
organizations is "the billion dollar steel trust." 
This is a consolidation of trusts in that line; 
and, while we cannot give figures to show its 
effect upon future prices, the following figures 
for iron and steel in the past furnishes a basis for 
future comparison which will be interesting. I 
foretell results similar to those indicated by the 
foregoing illustrations in other lines. 

The fluctuations in iron and steel have been 
greater than in most staples, as is shown by 
the following statistics, giving the prices for 
" Bessemer pig iron " for a period of ten years : 



Dollars, 
Year. per ton. 

1890 18.85 

1891 15.95 

1892 14-37 

1893 12.87 

1894 11.38 

1895 12.72 



Dollars, 
Year. per ton. 

1896 12.14 

1897 10.13 

1898 10.33 

1899 19-03 

1900 19-49 

March, 1901 16.50 

January, 1902 16.50 



That the tariff had nothing to do with the 
advance in prices since 1898 is shown by the 



142 The Trust: Its Book 

following comparison of English and American 
prices for steel rails for each month during 1899, 
which illustrates the influence of supply and 
demand. 

1899. English. American. 

January $22.44 $18.00 

February 23 . 24 20 . 50 

March 23.04 22.00 

April 23.64 25.00 

May 24.90 25.00 

June 24.90 25.00 

July 25.50 26.00 

August 30-96 31-33 

September 30.36 32.00 

October 32.76 33 . 00 

November 32.76 35.00 

December 34-02 35.00 

The steel trust has not abrogated competition ; 
it has simply elevated it to a higher plane. 
There are several plants outside of the trust, 
which are capable of being a David to the 
Goliath, if the Goliath should prove unreason- 
able. 

VI. 

Let us now consider the fluctuations of prices 
in staples which are not controlled by " trusts, " 
but some of which are supposed to be influenced 
by tariffs. 

The following prices are for " washed Ohio 
fleece wool/' which grade is less subject to 
variations than most of the other grades, and 
thus furnishes a better basis for comparison : 

Cents Cents 

Year. per lb. | Year. per lb. 



1890 33 

1891 33 

1892 30 

1893 29 

1894 23 

1895 17% 



1896 19 

1897 19 

1898 29 

1899 20}£ 

1900 32J4 

March, 1901 27 

January, 1902 27 



Influence of the Trust on Prices 143 

For several years coffee has been declining 
in price, owing to the fact that the supply has 
exceeded the demand, as is shown by the follow- 
ing statistics: 

AVERAGE ANNUAL COST OF NO. 7 RIO COFFEE. 

Cents, Cents, 

Year. per lb. j Year. per lb. 

1890 18.03 I 1896 12.15 

1891 . 16.40 1897 9.80 

1892 14.43 I 1898 6.80 

1893 17.42 I 1899 6.25 

1894 16.41 1900 8.30 

1895 15. 80 I March, 1901 7.35 

j January, 1902 6.50 

When prices declined below the cost of pro- 
duction, production decreased, consumption 
increased, and prices began to advance again. 
Good times and speculation helped the advance 
along. 

Prices have advanced from the lowest point, 
but what their fluctuations will be depends 
upon supply and demand. 

In cotton we have the same phenomena that 
we have in coffee, as is illustrated by the follow- 
ing statistics of prices for middling cotton, and 
we have the same cause and effect : 

Cents, Cents 



Year. per lb. 

1890 11.07 

1891 8.60 

1892 7.71 

[893 8-56 

[894 6.94 



Year. per lb. 
1896 7-93 

1897 7.00 

1898 5.94 

1899 • 6.88 

1900 9-25 



1895 7-44 I March, 1901 8.75 

I January, 1902 8.25 

VII. 

Power and machinery brought to bear upon 
natural resources have so increased production, 



144 The Trust: Its Book 

that wider and more frequent fluctuations in 
prices are to be looked for in the future than 
have occurred in the distant past. 

The Hon. Carroll D. Wright, United States 
Commissioner of Labour, and one of the most 
conservative statisticians, recently published 
the result of his investigations into the relative 
productive power of hand and machine labour. 

A thousand paper bags could formerly be 
made by hand in six hours and thirty minutes ; 
they are now made in forty minutes with the 
aid of a machine. To rule ten reams of paper 
on both sides by hand required 4,800 hours; 
with a ruling machine, the work is done in two 
hours and thirty minutes of one man's time. 
In shelling corn by hand, sixty-six hours and 
forty minutes would be required to shell a 
quantity which can be handled by a machine 
in thirty-six minutes. A mowing machine cuts 
seven times as much grass per hour as one man 
can cut with a scythe. These examples might 
be extended indefinitely; but a more forceful 
illustration will be found by considering the 
total horse-power applied to machines in this 
country and calculating how many men it 
would require to do the same work. For such 
calculations the census figures of 1890 must be 
used. 

One horse-power is equivalent to the power 
of six men. Thus, if the work of 63,481 men 
in the flour mills of the United States is sup- 
plemented by the use of 752,365 horse-power, 



Influence of the Trust on Prices 145 

the power is equivalent to the work of 4,514,190 
additional men. That is, it does seventy-two 
times as much work as the employes. 

The ratio differs radically in different in- 
dustries. Mr. Wright finds that the total horse- 
power used in the United States in 1890 was 
about 6,000,000, equivalent to the work of 36,- 
000,000 men, while only 4,476,884 persons 
were employed, the two kinds of power having 
a ratio of 8 to 1. A force of 36,000,000 
men represents a population of 180,000,- 
000, so that if the products of the manu- 
facturing establishments were all made by 
hand, it would require a population of that size 
to do it, with none left for agriculture, trade, 
transportation, mining, forestry, the profes- 
sions, or any other occupations. 

A still more striking illustration is found in 
our transportation system. In 1890 there 
were over 30,000 locomotives in this country. 
It would take 57,940,320 horses to do their 
work, or 347,425,920 men. In countries like 
China, nearly all the work of transportation 
is actually done by man power, and no further 
explanation of the economic difference between 
America and Asia is required. By the use of 
steam we are evoking aid from the heat stored 
up in our coal beds, equivalent to the working 
efficiency of the population of the whole earth, 
while the Chinaman lets his coal lie under- 
ground, packs his load on his back, and does 
his manufacturing largely by hand. 



146 The Trust: Its Book 

Mr. Mulhall, the British statistician, calcu- 
lated in 1895 that the use of steam power had 
increased five-fold in the United States in 
thirty-five years, thus more than trebling the 
collective working power of the population. 
He also remarks that the working energy of 
one American is more than double that of one 
European. Thus the civilized world, with the 
United States leading, is yearly doing an in- 
creasing amount of useful work, while Asia 
does no more than it did a thousand years ago. 
This fact alone will explain the demand for the 
"open door," and the growing world-domina- 
tion of the machine-using nations. 

Steam is our Genie of the Lamp, electricity 
our Slave of the Ring, and machinery an addi- 
tional slave, which the imagination of the 
Arabian romancist did not picture. In former 
times the men who possessed a thousand 
human slaves, and grew rich upon their labour, 
were but few ; to-day the men who own the 
power of a thousand horses, embodied in 
mechanical slaves which speak all languages 
and serve all masters with equal fidelity, are 
almost too numerous for enumeration. The 
inventors of the United States have created 
these slaves, and we are selling them to other 
nations at a rate which must soon impair the 
advantage we have heretofore enjoyed, and 
level up and level down labour the world over. 
, This is the ground-swell of cause which the 
statesmen of the world have to adjust to effect. 



Influence of the Trust on Prices 147 

The captains of industry, who have been in 
contact with and have comprehended and 
grasped these controlling forces in this evolu- 
tion of industry, have profited pecuniarily from 
it; but all they have got out of it is a living, 
somewhat more luxurious, perhaps, than that 
of the average citizen, but any surplus which 
they have not left to hospitals, churches and 
education has, in most cases, enervated and 
cursed their children. Many of them appre- 
ciate this, and we will have more Harvards and 
Yales and Cornells, and Johns Hopkins and 
Stanfords and Vanderbilts and Rockefellers 
and Carnegies and Morgans in the future. 

The talk about an Emperor in this country, 
which the distinguished president of one of our 
great universities recently indulged in, may be 
dismissed as a passing thought in a Lenten 
sermon. 

The organization of industry has taken place 
so suddenly that the public has been startled, 
as a good horse will shy at an umbrella when it 
is opened suddenly in his face ; but let the horse 
smell the umbrella and see that it is not danger- 
ous and his alarm will subside. Thus will it 
be with the feeling of the public toward trusts. 
Their evil will be eliminated, their good will be 
developed, their usefulness to mankind demon- 
strated, and the bogy which the rivalries of 
sensational journalism and partisan politics 
have conjured up will fade into thin air. 

The facts and the views herein stated are 



148 The Trust: Its Book 

presented as an antidote to those of the alarm- 
ists, but with a full appreciation of the tides 
and currents of public sentiment, which affect 
the industries and welfare of our country. 
These are indicated in the following quotation 
from the circular of a conservative banking 
house in relation to the new steel trust : 

"It will be cited in Congressional and Legislative halls 
as full of danger to American institutions through such 
unprecedented concentration of power in individual hands. 
It will revive the advocacy of Government ownership of 
railway lines and of more stringent "anti- trust" legisla- 
tion, and it cannot be denied that it brings up a very 
grave question before the American people as to the ex- 
tent to which the laws of the land shall permit or support 
such tremendous centralization of power in the industrial 
world. We might add, also, that it is likely to occasion 
at the next session of Congress a very active movement 
for the abolition of duties on all products made by this 
consolidated company, and if the tariff is once brought 
up as a subject of serious discussion and amendment 
there is no telling where it will end. We all know that 
the agitation of tariff revision is detrimental to general 
business; for, while it is in progress, both importers and 
manufacturers restrict their operations until they know 
to a certainty what the result of the tinkering is to be. 
Of course, these facts are not going to affect the immediate 
market for the shares, but they must enter into the minds 
of the big holders and lead them, as the occasion offers, to 
part with their holdings to the general public, as far as the 
general public will be disposed to buy." 

If any legislation in regard to "trusts" is 
necessary, it is in the direction of publicity and 
reports, for the protection of investors. The 



Influence of the Trust on Prices 149 

practice of over-capitalization, or stock water- 
ing, is considered by many persons a great evil, 
but it is an injury rather to those who practise 
it than to the general public. Real values are 
reflected in the market prices of securities. 
Bay State Gas was quoted at $1 per share, 
with a par value of $100, when Standard Oil 
was above $800. Capitalization is usually 
based upon earning power, and in this ''good 
will" is often a factor. A newspaper with a 
plant worth $50,000 may earn $100,000, net, per 
year. If a company was organized on this, 
what should its capital be ? A railroad is pro- 
jected, which, when built and with a large 
traffic developed, can pay dividends upon a 
capital which would seem very large in its 
inception, and yet carry for the public at low 
prices. Unless its projectors had had a pros- 
pect of a profit the railway would not have been 
built. So far as the interest of investors is 
concerned, they should have information, and 
they can then use their own judgment. There 
are frauds in all kinds of merchandise, and 
the doctrine of caveat emptor is of universal ap- 
plication. 

Mr. Carnegie has said that a successful busi- 
ness was like a three-legged stool, standing on 
labour, capital and brains; or brains, labour 
and capital; or capital, brains and labour — 
that neither is first and all are inter-dependent. 
The United States is fortunate in having such a 
citizen as Andrew Carnegie and millions of 



150 The Trust: Its Book 

others who, with opportunity, like him, are 
capable of "rising on stepping stones of their 
dead selves to higher things" ; there can be no 
dissent from Mr. Carnegie's kaleidoscopic con- 
ception. The combination of any two elements 
in the trinity can be pulled down by the dis- 
sent of the third. Each, therefore, must recog- 
nize the usefulness of the other and its share 
in the enormous benefits which Providence has 
conferred upon the human race in placing such 
resources of nature and such slaves as steam, 
electricity and machinery at their disposal to 
develop them 



CHAPTER VII 

WHAT COMBINATION HAS DONE FOR 
CAPITAL AND LABOUR 

Charles R. Flint 

The people who lack either the time or the 
inclination to examine into the truthfulness 
of things are so numerous in the world that it 
is a comparatively easy thing to set a fallacy 
afloat as a fact. Thanks to this condition of 
the public mind, an entirely false notion re- 
garding industrial properties prevails. Out 
of every ten thousand men in the community, 
there is hardly one who would not state it as a 
hard and fast proposition that the industrial 
enterprises of the country that have been 
brought together under the present system of 
consolidation are all outrageously over-capital- 
ized, and that their stocks present about the 
most hazardous investment conceivable. 

As a test of what is really behind the industrial 
stocks that are being dealt in on the Stock 
Exchange and on the curb, I have gone into 
the figures of thirty among the most prominent 
companies. These companies were selected 
at random. The greatest of all, the Stand- 
ard Oil Company, which last year paid 48 per 

151 



152 The Trust: Its Book 

cent, on the par value of its stock, is purposely 
not included in the list. Nor need the Standard 
Oil Company be included, for without it we 
arrive at an average that will, I believe, astonish 
many even among those who have been most 
active in the handling of these stocks. The 
statements, giving the name of companies, the 
capital stock, common and preferred, the net 
income, the market value of the stocks, and the 
percentage of earnings, is given in a concise 
tabular form on the next page. It will repay 
close study by any person who really wants to 
get at the true condition of values to-day. He 
will find that, instead of inflated values and 
boom quotations, we are trading on a very 
sound basis. He will find that the industrials, 
almost without exception, are worth a great 
deal more, judged by their earning capacity, 
than they are selling for in the open market. 
Some of these industrials are earning over 18 
per cent, a year on their market values, and the 
average for the entire 30 is 11.5 per cent. 

Even more astonishing than the earnings on 
the market value are the earnings on the par 
value. A very popular impression exists that 
industrials are composed principally of water. 
The best answer to this is that that the thirty 
companies included in the appended table show 
an average earning rate of 6.9 per cent, on 
their total capitalization at par. 

Choosing between two evils, we are told that 
if we must have consolidations, the danger 



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154 The Trust: Its Book 

lurking in the consolidation of railroads is per- 
haps not so great, " because they are based on 
sounder considerations. Their stocks and 
bonds have not been doubled or trebled or 
unduly inflated." In other words, railroad 
stocks rest on a sounder basis than do indus- 
trials. 

Even if this statement were accurate, which 
it is not, it would call for this commentary: 
that there is scarcely one of the great railroads 
of this country whose shares are now quoted at 
favourable prices on our Exchanges, which has 
not undergone the process of reorganization, 
because they were injudiciously organized. 
And while the common stock of many great 
industrial corporations may be said to have 
been issued not to represent tangible property, 
nevertheless, it represents a fair equivalent for 
tangible property, namely good will or earning 
power long-established, which, for obvious 
reasons, is as rightfully a matter of valuation 
as the manufacturing plant itself. 

On the other hand, when our great railroads 
were built, the whole projects were ventures, 
pure and simple, with earnings estimated, and 
hoped for, but not realized; and yet, under 
such circumstances, the capital stock, as a rule, 
was given away to the subscribers of the bonds, 
sold frequently below par, and it was out of 
the proceeds that the railroads were built and 
equipped. Subsequent defaults, foreclosures 
and reorganization, have demonstrated not 



What Combination Has Done 155 

only that the capital stock had no basis of 
value, but that the amount of the bonds them- 
selves, and the interest reserved on them, were 
unjustified. 

The large industrial corporations have been 
long enough in evidence to make it clear that 
very many of those who are responsible for 
the creation of these organizations have profited 
by the financial experience of railroad com- 
panies; and have organized these business cor- 
porations on a basis, where reorganization is 
likely to be no part of their business history. 

Mistakes have been made, but the com- 
parison between the usual organization of 
railroads and of so-called " Trusts" is not by 
any means unfavourable to the latter. 

As a matter of fact, however, railroad prop- 
erties even as they stand to-day in their re- 
organized form are not nearly so good an in- 
vestment as are the industrials, and their 
only hope of improvement lies in the extensive 
application of the principle of consolidation 
which has done so much for the industrial 
stocks. If the consolidation movements now 
on foot by Mr. Hill and Mr. Morgan and the 
other great railroad men are carried out, rail- 
road values will undoubtedly be much im- 
proved. As they stand to-day, they rank, as in- 
vestments about half as high as the industrials. 
This is shown by the list, printed on the 
next page, which, for the purpose of this 
article, I have made up in the same way as the 



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What Combination Has Done 157 

industrial table. Taking thirty, including the 
best properties in the market, they show an 
average rate of earnings on their market value 
of 5.5 per cent., and on their par of total capi- 
tilization of 5.6 per cent. On the face of it, 
this would show a very substantial situation 
so far as the railroads are concerned, placing 
them as a whole above the a level with govern- 
ment bonds. Unfortunately, however, the 
average is more a matter of accident than of 
anything else, as the earnings fluctuate from 
.7 per cent, on the market value up to 12 per 
cent., and from less than one-half of one per 
cent, on the par value up to 24 per cent. 

Surely, on this comparative showing, there 
is no better investment anywhere than is 
offered by the industrial stocks of to-day. 
The cold figures disprove absolutely the charge 
of general over-capitalization, so freely made 
by people who have but a superficial knowl- 
edge of the situation. Of course there have 
been cases of over- valuation. These stand 
out very plainly in the table of earnings re- 
ferred to. But the average showing is far 
ahead of that of the railroads. 

To pretend that the Trust constitutes a 
political or economic menace is absurd. In- 
stead of concentrating the wealth of the country 
in the hands of a few people, consolidations 
have had exactly the reverse effect. Where, 
under the old conditions, there were a hundred 
stockholders, there are to-day a thousand or 



158 The Trust: Its Book 

two thousand. Never before was there such 
a wide distribution of manufacturing interests. 
The great bulk of the stock is held, not by the 
very rich, but by the moderately well-to-do. 
The control under the new system is not vested 
as it was under the old, in the hands of a few 
abnormally rich men, but it rests with the 
majority of stockholders, whose numerical 
strength is growing every day. The danger 
to the community to-day lies not in the cen- 
tralization of manufactures, in industrial con- 
solidations, but in the centralization of wealth 
in the hands of a few men. This centralization 
was made possible by the old conditions of 
individualism. Unfortunately, the economic 
ideas which prevail to-day arrived so late that 
they have not proven sufficient, up to this 
time, to check the accumulation of great for- 
tunes by individuals. As the new scheme 
works itself out naturally, such accumulations 
will, in the future, be rare. 

There is no danger, either to the community 
or to business, in such consolidation as has 
been effected in the case of the steel trust. Its 
capitalization is based on solid properties. 
That it runs into a thousand millions is not a 
cause for apprehension, but rather the reverse, 
for it typifies the acme of scientific business. 
If, as objectors have pointed out, its securities 
equal nearly one-half the amount of money 
in circulation in America, the country has 
cause, not to fear, but to rejoice. Money, 



What Combination Has Done 159 

when based on sound considerations, as our 
currency is to-day, is but an expressed form of 
wealth. Stocks and bonds issued on a substan- 
tial basis, as are the stocks and bonds of the 
new steel combination, represent quite as much 
an expressed form of wealth as the currency. 
They supplement the money in circulation, 
and, always provided that they are not the 
mere output of a printing press, serve as tokens 
of valuable property. Such stocks and bonds 
are quite as important an item in the wealth of 
a country as its currency. As the business 
system of a country expands, the need, rela- 
tively, of money grows less. Instead of the 
actual interchange of gold and silver in com- 
mercial transactions, there comes a system of 
credit. The amount of business transacted 
on credit in the United States to-day is over 
two thousand times as great as that transacted 
in the exchange for gold and silver. As soon 
as the volume of trade mounts into great pro- 
portions, it is impossible to transact it on the 
basis of an actual exchange of currency. In- 
stead, every means of exchange is utilized. 
Drafts and checks are the chief mediums now 
known in the commercial world. Actual money 
is scarcely ever passed from hand to hand. It 
is idle, therefore, and absolutely valueless, as 
an object lesson, to set forth the proportion 
that any bond issue or stock issue bears to the 
amount of money in circulation. We have 
passed the point here in the United States 



160 The Trust: Its Book 

where such a statement carries any weight, 
and we have passed it because we have grown 
to such enormous proportions as an industrial 
nation. Not so very long ago, it was different. 
Then, a dollar in cash was more important, 
and it went further because it had more to do. 
When Mr. Evarts, at Mount Vernon, in his 
exquisitely humorous defence of the accuracy 
of the tradition that Washington had once 
thrown a dollar from the Virginia shore to the 
Maryland shore of the Potomac, stated that 
a dollar went further in those early days, he 
may be said to have suggested a great truth, 
and without being too serious, we may not only 
enjoy the delightful humour, but profit by it. 

We traded in times gone by on the basis of 
the money in circulation. The result was often 
disastrous. It left the country in a position 
where the close-fisted money-lenders had the 
market at their mercy whenever the notion 
seized them, or whenever they felt that there 
was a situation, real or imaginary, that war- 
ranted a demand for extortionate interest rates. 
This condition was a severe handicap to our 
merchants and manufacturers; but, despite 
this fact, they managed, by their enterprise 
and industry, to forge steadily ahead. Now, 
owing to these qualities, and to an economical 
and conservative administration of their affairs 
for the past ten years, they are in a stronger 
financial condition, and comparatively free 
from the domination of the money-lender. 



What Combination Has Done 161 

And, as in the case of individuals, so it is in the 
nation. Instead of depending upon the good 
will of the money-lenders of Europe, instead 
of trembling, as we used to do, for fear that they 
would call their loans, we have now reversed 
the situation. We are no longer borrowers 
from, but lenders to, Europe. Consequently, 
the money market has few terrors for us. 
From a debtor nation we have grown to be a 
creditor nation ; and this is due very largely to 
the fact that we are conducting our business 
affairs over here on the most scientific and 
advanced basis, thanks to the industrial con- 
solidations. 

At all times, there have been found plenty 
of people to oppose progress. The railroad 
and the steamship and the telegraph and the 
telephone all had to make their way in the 
face of violent opposition on the part of sup- 
posedly intelligent men. Where new economi- 
cal conditions are suggested, the opposition is 
invariably stronger than is met by proposed 
new physical conditions. It is not strange, 
therefore, that we should find ourselves face 
to face with men of standing in the community 
who combat the introduction of a business sys- 
tem that is, on its face, wholesome and profit- 
able to every one. Benefits arising from the 
centralized management of our industries are 
not confined to any one class of people. The 
greatest proportion of the benefit accrues to the 
workingman; but capital has its share of ad- 



162 The Trust: Its Book 

vantage as well in the new scheme. Capital's 
advantage comes, not so much in the shape of 
larger dividends, as in more certain dividends, 
The investor knows more certainly what he 
may expect, if the enterprise to which he sub- 
scribed is conducted on the basis that is at the 
foundation of the new order of things. There is 
a minimum of risk, which compensates very 
fully for the sentimental independence which 
has been lost. Business enterprises are no 
longer subject to all sorts of unforeseen contin- 
gencies. The danger from strikes, lockouts, 
over-production and ruinous competition is 
largely eliminated. 

Viewing the matter from every standpoint, 
the business man is benefited when he operates 
as a member of a combination instead of as an 
individual. His property is in the shape of 
stocks and bonds which he can market at a 
moment's notice, instead of in the shape of a 
plant, on which it would be impossible to 
realize anything like its value at a forced sale. 
In case of his death or disability, he leaves to 
his family a property that runs along un- 
interruptedly. 

Another great advantage is that a combina- 
tion can generally arrange to run its vast fac- 
tories on full time. The saving in production 
in this one item alone — that is, where a factory 
is run on full time instead of half time — is from 
4 per cent, to 8 per cent. Over-production, 
which is one of the most prolific sources of panic, 



What Combination Has Done 163 

can be largely prevented tinder the present 
system, and that without throwing any great 
body of workingmen out of employment. This 
was made very clear in the industries in which 
I am interested, during the period of depression 
from 1893 to 1897. Although the volume of 
business fell off very materially in those years, 
our factories were kept running and our help 
was regularly employed during all that period, 
and at the same time our stockholders received 
a fair return on their investments, considering 
the reduction in volume of goods turned out. 
There were no failures. Without combination 
at that time, there certainly would have 
been a considerable number of very serious 
failures. 

The combination is stronger than the indi- 
vidual, because it can institute a system of 
credits that prevents any great losses through 
bad debts. In one industry, with which I am 
identified, the losses from this source were re- 
duced, approximately, from one hundred thou- 
sand dollars during the year before consolida- 
tion to a thousand dollars last year on a volume 
of business amounting to $25,000,000. This 
may be a hardship to people who have not been 
in the habit of paying their debts, but I think 
the honest men in the community will be able 
to bear it with equanimity. 

The business man in combination can take 
advantage of cheap transportation facilities, 
which, as an individual, would be out of his 



164 The Trust: Its Book 

reach. An excellent illustration of this is to be 
found in one of the large corporations of which 
I am a director, which, since consolidation of 
the plants constituting its property, has built 
a large storage warehouse at Chicago. During 
the summer months, when the waterways are 
open, freight rates to the West are much cheaper 
than they are in the winter. This corporation 
takes full advantage of this fact by sending out 
its goods for Western consumption during the 
warm months, and laying them down in its 
storage warehouse in Chicago. The process of 
distribution from this point is comparatively 
simple and very much more economical than 
it would be if the stock had to be transported 
from the East as orders were taken. 

All these advantages redound directly to 
the benefit of capital, but indirectly they re- 
dound to the benefit of the consumer. They 
lessen the cost of production, and the consumer 
is bound to receive his share in this saving. 

Labour is immeasurably benefited by the 
new conditions. The tendency under natural 
laws would be for wages to gradually decline 
to the level of the wages paid in other countries, 
but the industrial combinations have sustained 
the wages of the American wage-earner. To- 
day, the tendency is to a minimum of profits 
and a maximum of wages. Any concern whose 
profits become abnormal at once invites com- 
petition. Naturally, these profits are reduced, 



What Combination Has Done 165 

and the consumer, who is the workingman, 
reaps the benefit. If the profits are not suffi- 
ciently abnormal to invite competition, the 
workingman again comes to the front, for 
he demands a larger share of the earnings in 
the form of increased wages. In either case, 
then, the wage-earners, as the great body of 
the community, reap the greatest advantages 
that come out of more economical production. 

Everyone knows, of course, that the American 
workingman to-day earns higher wages than are 
paid in any other country. This condition has 
been made possible, not because the American 
employer is any more liberal than his European 
competitor, but because the American work- 
ingman produces more, and he produces more 
because he has been supplied with the most 
perfect system of labour-saving machinery on 
earth. To supply this machinery, large capital 
is necessary. The individual manufacturer, 
standing alone, is not in a position to perfect 
his machinery in the same measure as the con- 
solidated enterprise. The result is that the 
workingmen benefit again in being supplied 
under consolidation with superior tools. The 
great body of the American wage-earners realize 
the advantages that come to them under the 
new order of things, and as the years go on will 
pay less and less attention to the clamour of 
the uninformed, and of the agitators who seek 
notoriety by opposition to " trusts.' ' 

The workingmen and their employers, in- 



166 The Trust: Its Book 

stead of being separated by the application of 
the new ideas of consolidation, are coming closer 
together. A manager, or superintendent, who 
is responsible to a large body of stockholders 
for the successful operation of a big plant, is, 
on the whole, much more likely to treat with 
his men on friendly terms, where differences 
arise, than is the individual owner of the plant. 
The latter, in many cases, will feel that his 
dignity has been outraged if his workmen pre- 
sume to find fault with his management in any 
respect. He knows that he is the court of last 
resort, and that any one should dictate to him 
as to the method of administering his own 
property is not to be tolerated. Instead, 
therefore, of discussing grievances, listening to 
remonstrances, and taking advice,the individual 
employer takes a high-handed course, and a 
strike ensues. Where, however, the plant is 
controlled by a combination, and the operator 
is simply a manager for this combination, no 
matter how large his holdings of stock may be, 
he is responsible to a higher court, the Board 
of Directors; and, before inviting a strike or 
a shut-down, he will exhaust every possible 
means to arrive at a settlement with his dis- 
affected men. This is almost invariably the 
case, and the records will show that where 
combinations have been effected strikes de- 
crease. 

People generally will come to realize very 
soon that the maintenance of the high standard 



What Combination Has Done 167 

of wages now paid in the United States is ab- 
solutely dependent upon the advantages which 
come through superior organization. We are 
to-day shipping manufactured goods to coun- 
tries where the rate of wages is, on the average, 
40 per cent, less than our wage earners are re- 
ceiving. But we can only do this to advantage 
in those industries that are controlled by large 
corporations. Of our total exports of manu- 
factured goods, which reached over four hun- 
dred million dollars last year, 80 per cent, were 
made by the so-called " trusts." Articles not 
made by "trusts" are being supplied almost 
entirely to neutral markets by Germany, 
Belgium and England, the cheap-labour coun- 
tries. 

America is now in the front in the race for 
industrial supremacy. The main factor that 
has placed her there is the system of consolida- 
tion. Surely, such results do not argue for a 
restriction, but rather for the continuance and 
enlightened development of the system. 



APPENDIX 

I. 

THE TRUST AND REPRESENTATIVE 
OPINION 

Rev. Lyman Abbott: 

On this subject "let there be light" — not 
heat. 

Senator Mark Hanna: 

"That it is necessary to have organized capi- 
tal is evident. It is utterly impossible for a 
corporation to land its product on the shores 
of another land, perhaps 10,000 miles away, 
place it in storehouses and await the demands 
of the consumer before it is sold, unless there 
is tremendous capital back of the corporation. 
The combinations of capital, as I have said 
before, are no new thing in foreign countries. 
That is why they have builded such splendid 
corporations and have accomplished such won- 
derful work in foreign lands. Let us wait and 
see how these experiments work. If they are 
bad they will fall to pieces of their own accord. 
If they are beneficial they will continue to 
grow. " 

169 



170 The Trust: Its Book 

President Roosevelt: 

"The machinery of modern business is so 
vast and complicated that great caution must 
be exercised in introducing radical changes 
for fear the unforeseen effects may take the 
shape of widespread disaster. Moreover, much 
that is complained about is not really the abuse 
so much as the inevitable development of our 
modern industrial life. We have moved far 
away from the old simple days when each com- 
munity transacted almost all its work for itself 
and relied upon outsiders for but a fraction of 
the necessaries, and for not a very large portion 
even of the luxuries of life. Very many of the 
anti-trust laws which have made their appear- 
ance on the statute books of recent years have 
been almost or absolutely ineffective because 
they have blinked the all-important fact that 
much of what they thought to do away with 
was incidental to modern industrial conditions, 
and could not be eliminated unless we were 
willing to turn back the wheels of modern 
progress by also eliminating the forces which 
had brought about these industrial conditions. 
. . . What remains for us to do, as practi- 
cal men, is to look the conditions squarely in 
the face and not to permit the emotional side of 
the question, which has its proper place, to 
blind us to the fact that there are other sides. 
We must set about finding out what the real 
abuses are, with their causes, and to what ex- 
tent remedies can be applied. " 



Appendix 171 

Prof. R. Mayo Smith, Columbia University: 

"It is the duty of every thinking man, 
not to be carried away by his first im- 
pressions nor to accept as justified the outcry 
against trusts." 

The Earl op Rosebery: 

"The Americans, scarcely satisfied with 
gigantic individual fortunes, use these by com- 
bination to make of capital a power which, 
wielded by one or two minds, is almost irresisti- 
ble, and if this power is concentrated against 
Great Britain in trade warfare it will be a 
danger we cannot afford to disregard. 

"A trust of many millions might compete 
with any trade in England, underselling all her 
products at a considerable loss. This is a 
possible outcome of the immediate future." 

Hon. Thos. B. Reed: 

"Let these agglomerations of wealth take 
one step in prices beyond what is warranted 
by the business condition of the world ; just let 
it be known that there are huge profits being 
gained; then, as all history shows, not only 
will competition arise, but over-competition, 
which will make for that business which ap- 
pears the most profitable on the list. Men are 
not now so short-sighted as they used to be; 
fewer geese are killed that lay golden eggs. 
Men understand that large profits mean over- 
competition soon to come. " 



172 The Trust: Its Book 

Wm. Morton Grinnell: 

"The evolution of industry is intimately 
allied to biological and sociological evolution, 
and their correlation constitutes the problem 
of the age. Competition is not in the long run 
the life of trade, but death to the weaker. It 
is the brutal doctrine of the survival of the 
fittest, the ethics of the savage beast and savage 
man. The earlier exponents of evolution enun- 
ciated this as the law of nature, but the later 
and more enlightened philosophers have taught 
us that harmony is the law of the universe. If, 
therefore, men would equally and honestly 
observe these laws we should have great indus- 
trial organizations working in absolute harmony 
for the good of all. These organizations we 
have, and we call them Trusts, and the good 
they have done for the people at large is im- 
mense, while the evils, very great indeed, are 
not due to the theory or system, but to short- 
sighted and selfish human nature. " 

Hon. Abram S. Hewitt: 

"The great corporations which have sprung 
into existence within the last ten years are due 
to an evolution which no more can be arrested 
than the flow of the tHes. They are not in- 
jurious to the community or to the working 
classes. They give more steady employment 
and a greater demand for labour. The wages 
have been raised and the prices of the commodi- 
ties produced have been lessened. All classes 



Appendix 173 

of the community have been benefited by their 
growth, except such as have been disabled for 
a time, only to reappear in the form of con- 
solidated organizations more profitable and 
more advantageous to the community." 

Prof. Edmund J. James, University of Chicago: 

" It looks as if we are face to face with gigantic 
revolutions in industry — as gigantic in some 
way as those our fathers faced a century ago. 
They, too, were besought by all whose interests 
were bound up in the old system to set them- 
selves against the coming change. In fact, 
it took the French Revolution to sweep away 
the relics of the Middle Ages and make way for 
the new era in industry, as in politics. A new 
corporate organization of industry may be the 
best substitute for the present competitive 
system, as the latter was the necessary follower 
of the corporate form characteristic of the 
Middle Ages." 

Rev. Dr. George D. Herron, Professor of 
Applied Christianity in Iowa College: 

"There is in trusts a wholly divine and re- 
sistless force making for co-operation and asso- 
ciation. The law of evolution, working toward 
the development of a social organism in which 
humanity shall become the social unit and 
every individual a perfect member thereof, 
cannot be gainsaid or legislated away. It is 
this positive force in industrial combination, 



174 The Trust: Its Book 

beneath all its monstrous and desperate facts, 
that should receive our chief consideration." 

Arthur T. Hadley, President of Yale Uni- 
versity : 

"So far as the present tendency toward in- 
dustrial consolidation is a financial movement 
for the sake of selling securities, it is likely to 
be short-lived. So far as it is an industrial 
movement to secure economy of operation and 
commercial policy, it is likely to be permanent. 
Attempts to stop this tendency by law will 
probably be as futile in the field of manufacture 
as they have been in that of transportation. 
The growth of these enterprises creates a trust 
in a sense which is not generally appreciated; 
it gives their managers a discretionary power 
to injure the public as well as to help it. The 
wise exercise of this trust cannot be directly 
provided for by legal enactment; it must be 
the result of an educational process which can 
be furthered by widened conceptions of direc- 
tors' responsibility. As this process of con- 
solidation and of education goes on, private 
and public business tend to approach one an- 
other in character. The question of state 
ownership of industrial enterprises, instead of 
becoming an acute national issue, as so many 
now expect, will tend rather to become rela- 
tively unimportant, and may not improbably 
be removed altogether from the field of party 
politics." 



Appendix 175 

Albert B. Boardman: 

"Now, trusts are not formed, or, if formed, 
they will not continue for any length of time, 
unless, on the whole, they are able to furnish 
goods to the consumer at lower prices and on 
more favourable terms than the constituents 
composing the trusts, or individuals or corpora- 
tions not in the trusts. If, therefore, by legis- 
lation the business conditions are made so un- 
favourable that a particular trust is driven out 
of business, it will necessarily follow that every 
one else engaged in the same line of business, 
working under conditions less favourable than 
those under which the particular trust is work- 
ing, must go out of business also. A certain 
quantity of business is therefore driven away 
entirely from the country." 

Aaron Jones, of South Bend, Ind., Master of 

the National Grange: 

"The first step to be taken in remedial legis- 
lation is to pass a well-considered anti-trust 
law by the Congress of the United States de- 
fining the powers and limiting the privileges of 
these corporations. And supplement this law 
by enactments of the several State legislatures 
to apply to such phases of the matter as could 
not be reached by the United States law. 
It would seem that these laws should provide 
for government and State inspection of their 
business, of their books, agreements, receipts 
and expenditures. This inspection should be 



176 The Trust: Its Book 

rigid and full, and the rights of the public pro- 
tected. If the corporations are conducting 
legitimate business no injury will be done them 
by inspection. They are using the powers 
granted to them by the State to crush out other 
enterprises, or for illegitimate political purposes. 
These practices are most reprehensible and 
should be punished by such penalties as will 
effectually stop them. " 

Benjamin R. Tucker, New York: 

"The right to co-operate is as unques- 
tionable as the right to compete. The right 
to compete involves the right to refrain from 
competition. Co-operation is often a method 
of competition, and competition is always, in 
the larger view, a method of co-operation. 
Each is a legitimate, orderly, non-invasive ex- 
ercise of the individual will, under the social 
law of equal liberty, and any man or institu- 
tion attempting to prohibit or restrict either 
by legislative enactment or by any form of in- 
vasive force is, in so far as such man or institu- 
tion may fairly be judged by such attempt, an 
enemy of the human race. " 

Gov. Pingree, of Michigan: 

" Most of you know where I stand with re- 
gard to trusts. I am opposed to them — always 
have been. I claim it is a cowardly way of 
doing business. If you cannot do business 



Appendix 177 

without being in a trust I haven't any use for 
you. Get out." 

John D. Archbold, Vice-President of the 
Standard Oil Company : 

"Trusts, or, speaking correctly, large cor- 
porations, are the necessary, indeed the irresisti- 
ble result of our rapidly growing commerce. 
In adopting them we are but following the 
example of that greatest of all commercial 
nations, England, under whose commercial 
charters capitalization and scope are practically 
unlimited. Any legislative restrictions im- 
posed here would operate alone to the benefit 
of foreign commercial competitors. " 

Samuel Gompers, President of American Fed- 
eration of Labour: 

"Organized labour looks with apprehension 
at the many panaceas and remedies offered by 
theorists to curb the growth and development, 
or to destroy the combinations of industry. 
We have seen those who knew little of state- 
craft, and less of economics, urge the adoption 
of laws to 'regulate' inter-state commerce, 
and laws to 'prevent' combinations and trusts; 
and we have also seen that these measures, 
when enacted, have been the very instruments 
to deprive labour of the benefit of organized 
effort, while at the same time they have simply 
proved incentives to more subtly and surely 
lubricate the wheels of capital's combination. 



178 The Trust: Its Book 

"For our own part, we are convinced that 
the State is not capable of preventing the 
development, or the natural concentration of 
industry. All the propositions to do so which 
have come under our observation, would, beyond 
doubt, react with greater force and injury upon 
the working people of our country than upon 
the trusts." 

H. C. Adams, President of Michigan University: 
"The vastness of this question will be ap- 
preciated when it is observed that its judicious 
treatment will result in securing for the people 
the advantages of the industrial development 
of the past century, while to ignore it or to fail 
in its solution would result in prostituting the 
wealth created by a hundred years of phenome- 
nal development to the service of a class. 

Byron W. Holt, of the New England Free 

Trade Bureau: 

"That the tariff by shielding our manufac- 
turers from foreign competition makes it easy 
for them to combine, to restrict production and 
to fix prices — up to the tariff limit — ought to 
be evident to every intelligent man. It ought 
also to be evident to all that the greatest ob- 
jection to trusts is due to their ability to raise 
prices above a normal, profit-producing point. " 

John F. Scanlan, of Illinois: 

"Give the American people limited time, 
and if trusts should prove to be against the 



Appendix 179 

interests of the majority, the law will harness 
them to the people's interest, not by killing the 
goose that laid the golden eggs, but by regulat- 
ing it. " 

Congressman Thomas Updegraff, of Iowa : 

" There are abundant remedies and sufficient 
remedies by which aggregations of capital can 
be controlled and made subservient to the public 
good, and whenever the American people say 
in earnest that the work shall be done, it will 
be done, and the trusts will be controlled, and 
we will save what is good in aggregations of 
capital and control what is bad. I don't care 
whether the tariff is the mother of trusts or not. 
That doesn't touch the question. If the tariff 
be in any sense the mother of trusts, what will 
you do? I will tell you what we will do, we 
will take care of the mother and save her; we 
will raise her children in the admonition and 
nurture of the Lord. That is the way to man- 
age trusts." 

Horatio W. Seymour, Chicago: 

" Trusts need not be more objectionable than 
corporations or sole ownership. They are sub- 
ject alike with them to the laws. If they vio- 
late the laws their officers may be punished. 
If they secure advantages under unjust laws, 
purchased in their interest, or if they escape 
the penalties of wise laws enacted to prevent 
and punish crime, it is certain that representa- 



180 The Trust: Its Book 

tives of the people in office have betrayed their 
trust and would have done it as quickly if 
the bribe giver had represented individuals or 
had represented himself alone. " 

Eugene D. Mann, of New York: 

"Whatever is evolved from the natural se- 
quence of events is right and proper, though 
the new, in comparison with the old, may 
momentarily surprise and even shock us. 
Evolution, displacements and readjustments 
are always going on. Mankind never halts in 
working out its destiny. The aggregation of 
commercial wealth and the consolidation of 
industries into what are now spoken of as 
trusts, are as natural and as inevitable a step 
in the march of human progress as was formerly 
the substitution of machinery for hand labour. 
They mark similar periods of triumph for 
brains, ingenuity and experience. Neither in- 
novation was accomplished in a day, but each 
has come in its destined time and order. The 
whole problem is that of continuous and ever- 
lasting improvement. What could be said of 
the world's development if, from generation to 
generation, we adhered only to the traditions, 
methods and institutions of the past?" 

Prof. John Graham Brooke, of Harvard: 

"Men will fight the trusts as they fought 
machinery and with precisely the same results. 
From the United States law of 1890 to the 



Appendix 181 

various attempts in different States there is 
thus far no hint that these colossal forces to- 
ward new organic forms can be hindered. I 
believe it to be the beginning of practical sense 
to understand that the new combinations can 
in no sense be permanently smashed. The real 
problem, immediate and imperious, is how to 
regulate and guide the new force that stands 
merely for the latest stage of industrial growth." 

Dudley Wooton, of Texas : 

" The tariff has enabled the corporate enter- 
prises and syndicates to establish and solidify 
their tyranny over the country, and by legalizing 
plunder to amass such immense capital as to 
dominate the whole field of commercial and 
industrial activity. After nearly forty years 
of its unjust and unequal rapacity, it now hides 
itself behinds the trusts and monopolies of the 
land as behind the breastwork its own iniquities 
have erected." 

William Fortune, President of the Indiana 
State Board of Commerce : 

" The evolution of organization has carried us 
rapidly through the different forms of progress 
and co-operative beneficence, all of which we 
have regarded with more of approbation than 
apprehension ; but now, when we are confronted 
with vast developments, which have come by 
natural process from social, industrial and 
economic tendencies, we awaken to the dis- 



182 The Trust: Its Book 

covery that we have been running with our 
eyes shut. A startled cry of 'danger ahead* 
echoes over the land, and in the first flush of 
excited feeling there is a general demand from 
the people for protective measures. A pause 
for investigation will afford the best prepara- 
tion for averting whatever may be the danger 
of the future. Methods of co-operation which 
will inure fairly to the benefit of any set of 
men will not, when understood, be obnoxious 
to the public ; but when through selfishness and 
greed there is a perversion of these methods 
that results in fraud, in oppression of or exac- 
tions from one class for the illegitimate advan- 
tage of another class, there is manifestly need for 
the exercise of the restraining power of govern- 
ment for the maintenance of equitable relations 
between the people." 

Dr. Howard S. Taylor, of Chicago : 

"Whatever touches the question of wealth 
production and distribution touches the centre 
of our civilization and invites from all our peo- 
ple such counsel and action as shall secure for 
us and our posterity the greatest possible good. " 

Gov. G. W. Atkinson, of West Virginia: 

"To sweep the trust issue into politics, and 
resolve one way or the other, as is the custom 
nowadays in political conventions so to do, 
it seems to me, is 'wasting fragrance on the 
desert air. ' We must come nearer home for 



Appendix 183 

a remedy than that. We must hit at its tap- 
root by national and State legislation by mak- 
ing it a penal offence against good government 
for men of great wealth to combine for the sole 
purpose of stifling and choking middle men 
and small dealers, as trusts have generally done 
in the past. Or better still, if the trusts would 
take their employes into their combines and 
their confidence, and would, after paying them- 
selves a reasonable dividend on the actual 
amount of capital stock invested, agree to dis- 
tribute a reasonable share of the profits among 
the skilled artisans whom they employ as a 
per cent, of profit upon their wages, the trusts 
would then be placed upon an honest, popular 
and reasonable foundation, and no one could 
complain or justly oppose them." 

E. C. Crow, Attorney-General of Missouri : 

" If the trust organizers could carry on their 
business through corporations with the liabili- 
ties of a partnership, the members of the trust 
would have the same opportunities and equal 
liabilities with the individual competitor. 
Equality of opportunity and responsibility in- 
stead of special privilege would exist. State 
statutes give a right of action in many in- 
stances for damages against trusts injuring 
competition in efforts to control the market. 
But where the trust is a corporation, with the 
present liability attaching thereto, the action 
can only be against the corporate entity itself. 



184 The Trust: Its Book 

But suppose the corporation and the members 
thereof had attached to them the liabilities of 
the partnership. Then the right of action 
would be against not only the corporation but 
each individual member of the corporation. 
This fact would deter millionaires from becom- 
ing members of trade combinations, make men 
cautious and keep down inflation of values and 
wild speculation." 

E. P. Do we, President of the Commercial 
Traveller's League: 

" While trusts are for speculative purposes 
principally, they have other sinister designs; 
organized first for the money in the deals, 
second for a more marked line of differentiation 
between the few very rich and the many very 
poor, and, thirdly, for the virtual enslavement 
of labour; not for industrial economies and to 
reduce the prices of the commodities to the 
consumer; not for the good of the people, but 
against their welfare, and all claims by those 
interested in trusts or by their subservient 
tools to the contrary are veritable lies. " 

The late Roswell P. Flower: 

"The possibilities of economy in production 
are enormous. Recently some waggon manu- 
facturers came to New York to organize for 
the capitalization of their business. They 
figured out a reduction of one-half of their 
travelling salesmen by this combination. This 



Appendix 185 

and other economies aggregated nearly four 
hundred thousand dollars, and the net profits 
of the concerns had not amounted in the aggre- 
gate to more than two hundred and fifty thou- 
sand dollars within a year. That is what capi- 
tal combinations are doing for business. " 

Professor Sumner, of Yale : 

"We have before us a grand transformation 
of industrial methods. It is an evolutionary 
transition. It affects the struggle for existence 
of all living men. It is vital to the means of 
livelihood, the control of economic resources, 
the accumulation of capital by individuals, 
the prosperity of families, the education of 
children; that is to say that it is vital to the 
nearest and dearest interests of every man of 
us. Moreover, all the so-called 'higher interests' 
(science, education, religion, charity, reform, 
etc.) are dependent on wealth-production. It 
is not hypocrisy, it is a kind of antagonism be- 
tween arbitrary codes and real motives which 
keeps up such a contradiction between what 
is thought to be noble principle and what is 
really active motive. There will be individ- 
uals who will be led by their notions about 
current methods of wealth-production to go 
out and preach against it. There will be sects 
which will withdraw and live outside of the 
movement which they dislike and condemn. 
With these exceptions our society will not relax 
in the least its eagerness to seize and develop 



1 86 The Trust: Its Book 

every device or principle which will push 
on wealth-production with greater energy. 
Whether we deplore it or not, we know it for a 
fact that this eagerness is the leading character- 
istic of our people and our time. If then, big 
industrial combinations will increase wealth- 
production, that will be the controlling con- 
sideration in regard to them. There can be 
no further question except in regard to safe- 
guards and regulations." 

James B. Dill, New York: 

"The industrial movement of to-day is of 
the highest order and is progressing in the 
right direction. It has been productive of 
great good to this country. It is a direct con- 
tributing factor to the commercial supremacy 
of the United States." 

Hon. Chauncey M. Depew: 

"As I look at it, the trust is on trial. If it 
proves, like the corporation, to be inoppressive, 
and a necessity to the conduct of certain opera- 
tions which are for the public good, it will live. 
If, on the other hand, it oppresses the people, 
they will very quickly put a stop to it. If it 
violates public sentiment, it cannot live — if, 
I mean, it puts into the hands of a few men 
the manufacture or distribution of any article 
of prime necessity, so that the American people 
feel that they are dependent on any set of men 
for coal or steel or anything which is in uni- 
versal use." 



Appendix 187 

Henry O. Havemeyer: 

"Corporations, whether directly such or in 
the form of trusts, are an expedient for uniting 
the interests of a large number of persons of 
smaller means into a large aggregation of capi- 
tal. Attack upon them is, therefore, an at- 
tack upon their stockholders. In the case of 
many well-conducted corporations these stock- 
holders are very numerous, and are often per- 
sons of moderate means, dependent upon their 
income for their support. In the absence of 
all disturbing causes, the direct tendency of a 
combination of capital is to promote economy, 
reduce expenses and diminish prices. This 
does not mean that a person having anything 
to sell will not get for it the largest price that 
he can. It means that with the abundance of 
capital ready for investment which is always 
found everywhere, the only way to prevent 
competition is to keep prices below the com- 
petitive point. " 

Hon. W. Bourke Cockran: 

"As every device which facilitates the in- 
dustrial co-operation of men promotes the 
volume of production, corporations possess 
enormous capacity for swelling the tide of 
human prosperity, and they have promoted 
the well-being of every community in which 
they have been encouraged, in spite of the fact 
that the management of corporations has been 
the blackest page in all our history. " 



1 88 The Trust: Its Book 

George E. Roberts, Washington; Director 

of U. S. Mint: 

1 'To escape from the pressure of conditions 
which have been making industrial investments 
precarious and unprofitable to the majority of 
operators, the latter have resorted to the com- 
binations. If the natural forces of the business 
world have a levelling influence and have for all 
time been steadily lifting manual labour in 
importance as compared to capital, why 
should it be believed that the latter can, by any 
new scheme hatched in back offices, suddenly 
rise to mastery? Is it not a little singular 
that a movement to which capital is driven by 
distress should excite such widespread fear 
that capital is about to become all-powerful? 
The reduction in the earnings of capital in 
the past has come, we have seen, through the 
increase in the amount of capital seeking in- 
vestment and through the inventions which 
have reduced the amount required per unit of 
production. Will that law cease to operate 
in the future? The production of wealth is 
now going on in this country at an unprece- 
dented rate. The amount available for in- 
vestment is increasing rapidly every year. It 
will persistently seek investment, and all at- 
tempts to exclude it from employment by 
fencing up the several fields of industry for 
quiet private possession by a few with extra- 
ordinary returns for their capital are inevitably 
doomed to failure." 



Appendix 189 

Charles W. Foster, former Governor of Ohio : 

"The evolution in business from the indi- 
vidual to the partnership, and from the partner- 
ship to the corporation, was no more natural 
and necessary than is the evolution from the 
corporation to the trust. Let us look the 
situation squarely in the face. Denounce it 
as we may, it has come to stay. Why? Be- 
cause the gigantic business operations of the 
present and future cannot be carried on without 
it. Through the trust the enormous waste 
that is entailed upon business operations by 
competition is saved; the product and the 
service performed is cheapened. Labour will 
have better opportunity to enhance wages and 
to shorten its hours of toil, as is so signally 
illustrated in the railroad service of the coun- 
try. Through the trust the superior inven- 
tive genius of our people (because of universal 
education) will have improved opportunity. " 

Professor John Bates Clark, of Columbia 

University : 

"It is well worth while to notice how much 
will be gained if we can safely allow the natural 
and centralizing tendency to go on. It means 
the survival of the most productive forms of 
business. It is first and chiefly because they 
can give more for a dollar than little establish- 
ments can give that the great establishments 
supplant them. They out-do the small ones 
in serving the public, and this power of superior 



190 The Trust: Its Book 

service is soon to have a new and unique field 
in which to display itself. We are entering 
on an era of world-wide industrial connection. 
Asia and Africa are incorporating themselves 
into the economic organism of which Europe 
and America are the centre. There is coming 
a neck and neck contest between European 
countries and the United States for lucrative 
connections with the outlying regions. There 
is also coming a later and grander contest be- 
tween both America and Europe on the one 
hand, and Asia and Africa on the other, for 
the command of the traffic of the world. In 
this contest victory involves more than any 
hurried expressions of mine can indicate. It 
means a leading position in the permanent 
progress of the world. It means positive 
wealth, high wages, and intellectual gains that 
cannot be enjoyed by those who develop less 
power." 

Paul Morton, Third Vice-President, Atchison, 
Topeka & Santa Fe R. R. : 

"I believe that trusts will regulate them- 
selves. Any attempt to keep prices higher 
than they ought to be is a direct bid for com- 
petition, and capital always stands ready for 
new industries to manufacture products which 
can be sold at abnormally high prices. Many 
of those who have tried it, say they like nothing 
better than to compete with a combination 
that is trying to get unreasonable profits. " 



Appendix 191 

J. Sterling Morton, of Nebraska, formerly 
Secretary of Agriculture: 

"There is much misapprehension as to in- 
corporated capital in the United States. Ora- 
torical vagarists have endeavoured to make 
common people believe that incorporations 
are not subject to economic laws of competi- 
tion, and that the relation of supply to de- 
mand is not the sole regulator of values. The 
fact, however, remains that money invested 
in manufactories or in railroads belonging to 
incorporations is no stronger, no better and no 
more exempt from the operation of commercial 
laws than the money which is owned by indi- 
viduals. There need be, in my judgment, no 
apprehension as to the trusts crushing out all 
competition. " 

Clem Studebaker, of South Bend, Indiana : 

"It is folly to talk of restraining legitimate 
combinations. There is scarcely a corner 
grocery in the land that is not witness to a 
combination of money and brains, a combina- 
tion for the mutual benefit of the combined. 
The whole country is built up of combinations. 
They exist alike in society, in government and 
in business, and it is as futile and senseless to 
talk about restrictions in this particular as it 
would be to undertake to make Niagara flow 
up stream into Lake Erie. " 



192 The Trust: Its Book 

Professor George Gunton, President of the 
Institute of Social Economics: 

"Trusts, instead of being sudden monopo- 
listic creations that have been sprung on the 
community by a few designing conspirators, 
are but the last link in an industrial chain more 
than a century long; they are no more revolu- 
tionary than any one of the previous links, 
and less so than some of the earlier ones. Each 
one of these links in the great chain of industrial 
evolution came and stayed only because it was 
more profitable than its predecessors to those 
who employed it, lessened the cost of produc- 
tion and served the community more cheaply. 
Had it not done this, it could not have sustained 
itself in competition with the old methods. " 

David Ross, Secretary Illinois Bureau of 
Labour Statistics: 

"When the great railroads organized years 
ago the apprehension prevailed that rates 
would be advanced, and the calamity prophets 
of that day, like the present, were painfully 
realistic in describing the fate that was to 
destroy us. Transportation charges for freight 
are less by two-thirds now than they were 
prior to the organization, with a corresponding 
improvement in the service.'* 

Henry W. Blair, former U. S. Senator from 

New Hampshire: 

"It is frequently observed that the trusts 
are a natural development of the protective 



Appendix 193 

tariff, and the strong prejudice against the 
evils which appear to be flowing from them is 
used as an argument against the protective 
system. That is to say, the existence of the 
trust is an argument for free trade. The ordi- 
nary and perhaps sufficient reply to this asser- 
tion is the fact that the trust exists in free- 
trade countries as well as in our own. This 
fact is in itself conclusive that the trust does 
not originate in protection. It must be re- 
membered that trusts are international already, 
and if unrestrained the tendency of capital to 
combine will become world-wide.'/ 

W. W. Potter, member of the Pennsylvania Bar : 

"To the community as a whole, large cor- 
porations are neither injurious nor dangerous. 
On the contrary, the economies effected by the 
concentration of capital and its direction by 
competent management means always the 
cheapening of commodities to the public. " 

William Dudley Foulke, of Indiana: 

"The numerous laws which have already 
been enacted to break up trade agreements, 
pools, and technical trusts, have been ineffec- 
tive. They have resulted in the organization 
of larger corporations which are more perma- 
nent and more dangerous in their character 
than the things which are prohibited by statute. 
If it were possible to break up these corpora- 
tions, which may well be doubted, the men 
who compose them would unite perhaps in 



194 The Trust: Its Book 

partnerships or other forms of union to accom- 
plish the same objects. If you break up these 
there are infinite varieties of organization 
which will take their place. The tendency 
of men to associate for the accomplishment 
of a common purpose is like the law of gravita- 
tion, and no statute will be found effective 
against such a tendency. " 

A. Leo Weil, member of the Pennsylvania Bar: 

" Large capitalization is a relative term, and 
considered with reference to the present trade 
conditions, the capital employed is not larger 
than is necessary successfully to carry on such 
enterprises. Consolidations are the out-growth 
and the symptom of the advancing civilization 
of to-day, and the inevitable tendency of its 
complex trade conditions." 

Sir Richard Tangye, the English Iron Master : 

"America will one day awake to the stern 
reality of the evil, and when its terrible nature 
is fully realized some strong legislation must 
follow. I believe if legislation does not step in 
and treat these men as it would treat other 
deadly enemies of the State, there will be such 
an uprising in the States as has not been since 
the accession of Abraham Lincoln to supreme 
power. There is no tyranny in the world to be 
compared with the tyranny of the active, 
scheming gold tyrant. It is inconceivable that 
70,000,000 free Americans will bend their necks 



Appendix 195 

to such a sordid despotism. If they do, they 
will deserve to be enslaved. " 

Mr. Russell Sage: 

"The great railroad combinations we have 
had thrust on us recently I consider only less 
dangerous than the industrial combinations, 
because they are based on sounder considera- 
tions. Their stock and bonds have not, in 
general, been doubled or trebled, nor unduly 
inflated. But they are bad, nevertheless. 
They are sure to arouse the people. And the 
people, once aroused, are more powerful than 
the railroad combinations. " 

Edward Atkinson, of Boston: 

"There are some other combines where there 
is very little water, if any ; where there has been 
great economy in doing the work, and which 
are managed with great skill at lessened cost 
and lower prices relatively; they have a right 
to stay. I do not like the methods of some of 
them, but there might have been no possibility 
of the low prices that have prevailed either for 
oil or for sugar or for some other articles except 
on an organization and combination of the 
ablest possible men working on a very big 
scale for the least possible margin of profit. 
The same in the combination of railroads. Fol- 
low the combination of railroads from the time 
when Vanderbilt organized the first system 
and you find there has been a steady, consecu- 



196 The Trust; Its Book 

tive reduction in the freight charge, increase 
of quantity moved, lessened margin of profits, 
higher wages for the engineers and workmen, 
and general benefit to the public. I think all 
those things work out by natural laws, but I 
do think that in many cases the existence of a 
protective duty helps to maintain a trust that 
ought not to have that influence; all trusts 
ought to be made subject to competition with 
the world. 

James Logan, General Manager of the United 
States Envelope Company: 

"That there is danger to the State in the 
combination is a preposterous idea. On the 
contrary, the well managed combination is a 
distinct gain to the State. Any one who doubts 
this need only consult the foreign newspapers. 
Everywhere, he will find a cry of industrial 
alarm levelled, not at the individual American 
manufacturer, but at the American nation. 
This is because the combination has done for 
the American State what the individual was 
never able to do — put it in industrial control 
of the world. A system that in a few years can 
do this ought certainly to be encouraged, and 
as it benefits the State it necessarily benefits 
the individuals who make up the State." 

John M. Stahl, Secretary of the Farmers' 

National Congress: 

" Trusts are the latest devices for doing things 
in a large way. They are the latest advance 



Appendix 197 

in a steady, persistent movement that has 
dominated the industrial development of the 
last one hundred years; that has gathered the 
isolated workers with tools, working alone, 
into shops, and then has brought a score of 
shops into a factory, and has then combined 
factories. While thus developing the factory 
system until the result has been well termed 
an industrial revolution, it has none the less 
worked a similar revolution in merchandising, 
in transportation, and in yet other lines of 
human activity; always resistlessly absorbing 
and combining to put more men and greater 
means under the control and direction of the 
masterful brain that has reached the place it 
occupies by a civil service indisputably based 
on merit ; truly a 'natural selection' in industry, 
always having for its object doing things in a 
larger way, because it is constantly proved that 
this is doing things in a more economical way 
(whether, all things considered, it is the best 
way, I cannot discuss here). Hence the trust 
is a logical phenomenon in this industrial devel- 
opment. " 

Henry White, Secretary of the United Gar- 
ment Workers of America: 

"The industrial combinations known as 
trusts have so entrenched themselves in our 
economic system that it is not so much a ques- 
tion now as to how they can be suppressed, but 
what the public attitude should be towards 



198 The Trust: Its Book 

them, and whether and how they should be 
regulated for the public benefit. They are 
already a phase of our industrial development, 
and being here have at least some presump- 
tion in their favour ; but they are not yet suffi- 
ciently established to give them the sanction of 
time and experience. They have just forced 
their way into the arena of public activity. 
The benefits derived by the community from 
them still require demonstration, likewise 
adequate proof as to the dangers attending 
their existence. Simply citing cases showing 
abuses is no indictment against the method 
itself. We must distinguish between the use 
and abuse of a thing, otherwise no human in- 
stitution could stand. While pointing out the 
evils of trusts we must not forget the serious 
grievances of competitive business — its limita- 
tions, its wastes, its uncertainties. Working- 
men are only too familiar with the dishearten- 
ing reply when asking for an increase of wages, 
'Can't afford it on account of competition.' 
The trust method, at least, changes that situa- 
tion so far as ability to concede better condi- 
tions is concerned." 

Samuel M. Jones, Mayor of Toledo, Ohio : 

11 The triumph of the trust is one of the mar- 
vels of the closing years of the nineteenth cen- 
tury; but they are an economic development, 
strictly in the line of progress, and our problem 
is not how to destroy them, but how to use 



Appendix 199 

them for the good of all. Like their prototype, 
the labour-saving machinery of wood and iron, 
they have come to stay. A labour-saving 
machine might have great value on account 
of its producing capacity, but might be so de- 
structive of human life as to make it imperative 
that it should be so improved that its 'saving' 
power might be utilized without injury to the 
operative. Thirty-five years ago I saw a mob 
of teamsters trying to destroy the first pipe line 
ever built for the transportation of oil. They 
feared that the pipe line was an attack upon 
their craft. The movement against the trusts 
rests identically on the same moral basis as the 
rage of a mob against the pipe line, elevators 
and labour-saving machinery generally, and I 
predict that it will have the same result in the 
end. All the legislation thus far against the 
trust has been almost as futile as a law against 
the change in the moon's phases or the ebb 
and flow of the tides. We are not going back 
to the individualistic method of production. 
We are not going to pull down the department 
stores in order that the people shall sustain 
fifty small stores in place of the one department 
store. If that is what we propose, let us con- 
tinue the principle ; destroy the small stores and 
turn the business over to the peddlers. This 
will be carrying to logical conclusion the sense- 
less objection to the department store and the 
trusts. The trust is preparing the way, show- 
ing society the great benefits that may be de- 



200 The Trust: Its Book 

rived through association in industry and the 
great economic value of association, both in 
production and distribution. An invention 
that lightens the burden of the world's toilers 
and makes it possible for one man to do the 
work of twelve is a 'labour-saving machine.' 
Does it matter whether the machine is made 
of wood and iron or composed of organizations 
and associations of men ? If the result is the 
same it is a labour-saving machine. In this 
sense the trust is a labour-saving machine. '' 

United States Industrial Commissioners' 
Report to Congress, February, 1900: 

" Industrial combinations have become fix- 
tures in our business life. Their power for evil 
should be destroyed and their means for good 
preserved. " 

Edward Ke asb y, of New Jersey : 

They have been the means of the co-opera- 
tion of individuals and the carrying on of large 
undertakings. They have accomplished too 
much for this country to be destroyed. It may 
turn out that some day great corporations will 
organize, well managed, conservative and 
steady, free from the dangers of bitter compe- 
tition, regulating prices according to demand, 
which will have the investment of all the people 
of the country, so that there will be a means of 
safe, steady investment, such as no ordinary 



Appendix 201 

business corporation is now, because of the 
danger of sudden destruction." 

Ed. W. Bemis, New York Bureau of Economic 
Research : 

" The trust problem, like the slavery question, 
will take a generation or more to settle, and, 
like the slavery question, will entail endless 
trouble unless approached intelligently and 
with deep conscientious devotion to the public 
weal." 

M. M. Garland, former President of the Amal- 
gamated Association of Iron and Steel 
Workers : 

"The working people are appealed to in al- 
most every State to urge the passage of some 
pet measure of certain representatives to law- 
making bodies which propose to crush out 
trusts and combinations, and while it may be 
that labour unions do not possess the skill, cun- 
ning and capability of trusts, to defeat the aim 
of the enactment, it is certain that the applica- 
tion of such legislation has found its final and 
only target to be the labour union. Future 
anti-trust legislation must be drawn with a full 
knowledge of whether it is intended to cover the 
evils claimed by its title, or whether it is to re- 
strict the efforts of the workman in the organi- 
zation of his fellow men. 

"Thus far, in this new day of trusts, the 
workmen in rolling mills find their inclination 



202 The Trust: Its Book 

is to treat with organizations. Annual wage- 
scale agreements were presented by our repre- 
sentatives and conferences arranged promptly. 
An advance in wages ranging from 10 to 25 
per cent., in different departments, was se- 
cured, and further advances in wages seem as- 
sured by reason of advances in prices of material 
and product, which is one of our agreements. " 

Attorney-General Gaither: 

"Modern monopolies or trusts claim no pro- 
tection from the law; on the contrary, they 
simply ask that they shall not be interfered 
with, relying upon the crushing power of the 
exclusive privileges which their own control of 
great aggregations of capital has obtained for 
their nourishing existence. The old monopoly 
was a creature of the law, the modern trust 
seeks to establish itself without legislative as 
sistance, and in many instances in defiance of 
express enactments. It is manifest, therefore, 
that present constitutional prohibitions against 
monopolies do not touch the modern type of 
these dangerous elements in the business world 
— that a prohibition on the sovereign power 
from creating an exclusive privilege in business 
cannot prevent such privileges from being ex- 
ercised when acquired by means independent of 
the sovereign itself. We must consequently 
look for the machinery to properly deal with 
these new creations of modern industrial life 
in new legislation applicable to the new phe- 



Appendix 203 

nomena, and not in any attempt at adaptation 
of old principles which were meant to apply to 
practically opposite conditions." 

Louis F. Post, of the National Single-Tax 

League : 

"Trusts are buttressed by protection or have 
direct special privileges, like railways, or pecu- 
liar land advantages. In the last analysis trusts 
cannot be perpetuated unless they come to own 
the natural sources of supply and distribution 
— the land. Like Antaeus, they must have 
their feet upon the ground. And it is only by 
forcing their feet off the ground that we can de- 
stroy them. Abolish the tariff, abolish all 
monopolies that can be abolished, take public 
highways for public use and collect from land 
owners the annual value of their special ad- 
vantages — do that and you put an end to the 
trust. You cannot do it in any other way. " 

Thomas J. Morgan, of Chicago : 

" We socialists rejoice that the trust has come 
to show you that the logical sequence of the 
ownership and control of what is now known 
as private property and the resources of the 
earth — all you business men and members of 
the great middle class have to make up your 
minds — that the private property of this great 
country and others like it, as our friend has said, 
will be organized into trusts until there will be 
one trust and you will not be in it. You can 



204 The Trust: Its Book 

send bands of music to your legislatures; you 
can pass resolutions ; you can hold your demon- 
strations everywhere, but the concentration of 
private property, the right of man to own all 
he can get and hold all he gets, will go on with 
irresistible force so long as the principle of 
private property in the things by which we live 
is maintained by you men." 

John W. Hayes, Secretary and Treasurer of 
the Knights of Labour: 

"To sum up the whole, this policy of the 
trusts is an aggressive invasion organized 
against the best interests of society and de- 
structive to our free institutions and popular 
government. It is too often the instigation of 
fraud, corruption, bribery and treason. It is 
the ally of despotism, tyranny, mercenary 
selfishness and slavery, and is the enemy of 
the elevation of the race and the equality 
of man." 

Ed. Rosewater, Editor of Omaha Bee: 

" We are confronted by grave problems gen- 
erated by the industrial revolution of the nine- 
teenth century. The trust is but the outgrowth 
of natural conditions. The trend of modern 
civilization is toward centralization and con- 
centration. This tendency is strikingly ex- 
hibited in the congestion of population in large 
cities, the building of mammoth hotels, tene- 
ment blocks, sky-scraper office-buildings, the 



Appendix 205 

department store and colossal manufacturing 
plants. The monopolistic combinations of cor- 
porate capital known as trusts have their origin 
in over-production and ruinous competition. 
Honestly capitalized and managed, with due 
regard for the well-being of their employes, 
and operated economically for the benefit of 
consumers of their product, these concerns 
are harmless." 



II. 

THE TRUST IN OPERATION 

The following excerpts from the testimony 
given by Mr. Charles R. Flint, before the 
United States Industrial Commission, in March, 
1900, have a special value as the unstudied 
opinion of a great ''trust-builder." They 
also describe the effect of industrial combina- 
tion as seen in actual operation, thus serving 
as practical illustrations of the theories con- 
tained in the preceding essays. 

Washington, D. C, April, 1901. 

The commission met at 10.46 a. m., Mr. Farquhar 
presiding. Mr. Charles R. Flint was introduced as a 
witness, and, being duly sworn, testified as follows: 

Q. (By Mr. Jenks.) You have had in your business 
some personal relations with various industrial combina- 
tions, I understand. Will you be kind enough to mention 
some of those with which you have been connected as 
organizer? — A. I have organized, or been one of the 
organizers, of the National Starch Company, the Ameri- 
can Caramel Company, the Sloss-Sherneld Company, 
and the United States Rubber Company. [A later list 
would include the United States Bobbin and Shuttle 
Company, the Union Selling Company, the American 
Chicle Company, the International Time Recording Com- 
pany, the Rubber Goods Manufacturing Company, the 
Fairmont Coal and Clarkson Fuel Company, the Com- 
puting Scale Company, and the Pacific Packing and 
Navigation Company.] 

207 



208 The Trust: Its Book 

Q. Will you state briefly the reasons that influenced 
the different concerns that were previously separate to 
come together into these combinations? — A. To secure 
economies through combination, and to have the prop- 
erty in a form where it would have a current market 
value. 

Q. That is, in stocks and bonds instead of in the plants 
themselves? — A. In realizable securities. By joining 
the combination the individual manufacturers recognized 
that in the event of death or disability, their successors, 
instead of having to compete with the best intelligence 
in the industry, would have that intelligence allied with 
them to protect all their interests. Then the induce- 
ment on the part of many people has been that, owing 
to the war of prices which has existed (such wars being 
the death instead of the life of trade), they have felt 
forced to enter into combinations in order to avoid failure 
or serious depreciation of their interest. 

Q. So far as the danger that comes from the death 
of members of those separate industries is concerned, is 
there not a difference between a great combination con- 
trolling a large share of the output and a partnership ? — 
A. Provided there exists a union of interest of the ablest 
men in the industry, the efficiency and ability of the 
management is not materially reduced in the event of 
death. An individual corporation, however, no matter 
how well organized or how well established, in the event 
of the death of its head fails for want of ability of the first 
order in its management. The best example of that which 
I have in mind at the moment is the way the business of 
A. T. Stewart went to pieces after his death. If that had 
been a part of a combination and Mr. Wanamaker had 
been in the combination, it is reasonable to assume that 
the business never would have declined. 

Q. You spoke of various economies that it was ex- 
pected might be made. Will you take that up a little 
more in detail? — A. In general, centralized manu- 
facture permits the largest use of special machinery. In 



Appendix 



209 



the different combinations the manufacturing has been 
centralized and economies secured through the adoption 
of more economical methods which are made possible by 
the centralization of a large volume of business. Then, 
by running a factory full time, which can be brought 
about through centralized manufacture, there is a sub- 
stantial reduction in the percentage of overhead charges. 
In recent calculations we have found that the percentage 
saved in the cost of production by running a factory full 
time instead of half time is from 4 to 8 per cent. In 
certain industries there have been substantial economies 
through direct sales — direct distribution — although in 
securing economies in that department of the business 
very great care has to be taken not to decrease the effi- 
ciency of the organization. One of the dangers that 
industrial organizations are subject to is that the manage- 
ment, desirous of securing economies, are liable to go too 
far in securing economies in the sale of their products. In 
doing so they are very likely to reduce very seriously the 
efficiency of that branch of the industry. Substantial 
economies can be made in that way, but great care must 
be taken in effecting them. 

Q. Does it make any difference as to the kind of goods 
that you have to dispose of whether you can make econ- 
omies in this way by selling direct or through agents ? — 
A. A very decided difference. 

Q. Can you illustrate that ? — A. The American Chicle 
Company is enabled to distribute a large amount of 
goods owing to the fact that it has trade-marks that 
are very highly regarded by the public. In the case 
of the American Chicle Company the most complete 
centralization has come about. The whole business has 
been centred in one office, but they have 30,000,000 cus- 
tomers that insist on having their particular brands. 

Q. In the case of the American Chicle Company, then, 
your idea is that they may make these economies in sell- 
ing by lessening the number of travelling men or by 
lessening the amount of advertising? — A. Yes; by re- 



210 The Trust: Its Book 

ducing the amount of advertising, although great care 
must be taken not to go too far in that direction. 

Q. They can make the advertising more efficient ? — A. 
Since combination has been brought about they can 
secure the same results at considerable less expense, 
owing to the more intelligent distribution and method 
of advertising; and advertising in a very large way en- 
ables them to secure more favourable rates. 

Q. In the case of these companies that you have been 
speaking of, has there been any material saving by re- 
ducing the number of travelling salesmen ?• — A. Yes. 

Q. Is there any other saving that had been expected 
from the combination ? — A. By centralization there 
has been a reduction in the carrying of stocks, thereby 
reducing interest, insurance, storage, and shop work. 

Q. How is it you are able to reduce the stocks you carry ? 
Is it because you can gauge the markets better and fit 
your supply better to the demand? — A. Yes; production 
is regulated. That is one of the great advantages of in- 
dustrial combinations. Where there are a large number 
of concerns that are competing without any general un- 
derstanding or plan, there is a tendency to overproduc- 
tion, with the result that markets become demoralized. 
Overproduction is a breeder of panics, and failures result. 
When these interests are combined, production is regulated 
to the requirements of the country to a large extent. 

Q. Can you think of any other sources of saving that 
operate ? — A. The advantage that results from standard- 
izing production by reducing the number of styles. That 
causes a substantial reduction in the cost of manufacture, 
and helps to reduce stocks. Then, too, the company 
has the advantage of the highest intelligence in the in- 
dustry in adopting the best, standards. 

Q. Can you mention whether you expected to save 
anything, or have saved anything, in the way of freight 
charges? — A. Yes; a well-managed combination takes 
advantage of the cheapest transportation facilities. 
They will ship goods to the West, for instance, when they 



Appendix 211 

can get the advantage of water freights on the lakes. 
They have storage facilities at western points, and the 
rate of freight is considerably less during the summer 
than when water transportation is closed; the well- 
managed industrials take advantage of these conditions. 

Q. (By Mr. Farquhar.) Are there not some economies 
in the purchase of raw materials ? You have said noth- 
ing at all about where you get your raw materials ; whether 
under combination you can secure them cheaper, or 
make arbitrary rates from the parties you buy them 
from. — A. As a rule there is not much saving to be se- 
cured in the purchase of staple merchandise. In some 
instances the large consolidations are at a disadvantage, 
owing to the fact that they are such large buyers. In 
general, I should say that some economies can be secured 
by them, but these would not be important unless the 
combination should use a very large percentage of the 
raw-material produced. In considering the raw material 
market, it is necessary to include in your calculations all 
the raw material in the world, owing to the present facili- 
ties for quick transportation. Raw material in London 
is as available as if it were around the corner; therefore, 
unless an industry uses a large percentage of the raw 
material that is produced in the world at large, no im- 
portant advantage can be obtained. 

Q. Can you mention any other savings that you had 
anticipated in the formation of these companies? — A. 
When men come together who have heretofore been in 
competition, they bring to the common interest a very 
complete knowledge of the credit conditions; and a com- 
bination must guard itself against bad debts. 

Q. Do you think of other economies? — A. The general 
advantages that result from comparative accounting. 

Q. You know that Mr. Havemeyer said that the pro- 
tective tariff was the mother of all trusts. I would like 
to ask you if that is true in regard to the combination of 
the rubber industry, whether the tariff has enabled you 
in any way to make a combination ?— A. No; the relation 



212 The Trust: Its Book 

of the tariff to the rubber industry has received practically 
no consideration on the part of rubber manufacturers, 
except in the case of rubber clothing, which would amount 
to, say, less than one-half of i per cent, of the total in- 
dustry. Very few rubber manufacturers could tell you 
what the percentage of the duty is. They have not 
given it any consideration. 

Q. (By Mr. Litchman.) Is it not true that the manu- 
facture of mackintoshes is protected in this country by the 
tariff? — A. Yes; but there are people who insist on wear- 
ing English clothes, and they are supplied by the mackin- 
toshes of London. 

Q. Then, as the promoter of this combination, you are 
not able to say whether the tariff is any benefit to the 
rubber industry or not ? — A. I could not say. I assume 
that if the tariff was entirely removed it might be that 
some parties would take advantage of the lower rates of 
wages in Europe. In fact, Americans would be very likely 
to establish factories abroad, utilizing the cheap labour, 
and then bring the products into this country. The most 
important rubber factory in Great Britain, for instance, 
was established by an American. He took the machinery 
over there and established the business in Edinburgh. 
In the event of the tariff's being taken off, I should say 
that the rubber manufacturers would take advantage of 
the low-priced labour and take American methods to 
Europe and so would be able to produce rubber goods 
cheaper than they could be produced in the United 
States. 

Q. Are you familiar enough with labour in this country 
and in Europe to say anything with regard to the relative 
efficiency of labour here and there? — A. In general, I 
believe that American labour is more efficient than Euro- 
pean labour, especially where the American workman is 
bossing the machine: where he occupies the position of 
an overseer. The machinery is doing the work that pauper 
labour is doing on the other side. But in the manufac- 
ture of rubber boots and shoes, and in industries where 



Appendix 213 

the greater part of the work can not be done by machinery, 
but is done almost entirely by hand, I am satisfied that 
you can get more labour for your money in Europe than 
you can in the United States. If you will examine our 
exports, you will find that a large percentage of our ex- 
ports of manufactured goods are the products of machinery 
where the American workman is an overseer of machinery 
instead of a hand labourer. On the other hand, you will find 
that the neutral markets are supplied by the cheap-labour 
countries with articles in the production of which hand 
labour predominates. 

Q. You spoke sometime ago about the advantages or 
savings that came from concentration of management, 
and then later, in another connection, of the advantages 
that came from stimulating individuality in the manage- 
ment of plants. I wish you would develop that thought 
a little further, if you will, and speak of the kinds of 
industry that are particularly adapted for the concentra- 
tion of management, and of the others where the retain- 
ing of the individuality in management is more desirable. 
— A. In general I think that a centralized management 
is the most desirable if there are men of sufficient intel- 
lectual ability to administer an extended business; but 
it is difficult to find a man of sufficient ability to run one 
large business, and there are few intellectual giants that 
have the ability to run ten or more large businesses. 
In my judgment one of the dangers to the success of 
industrials is that parties, without being intellectual 
giants, are liable to attempt to centralize too much. 
Taking men as they are, I think that in businesses where 
high-class ability is required at many places, where 
the business is not of such a character that its conduct 
can be reduced to rules, where its success depends on local 
ability and local judgment, and where the efficiency of 
the selling department is involved with long-time personal 
relations, it may be very dangerous to suddenly centralize 
such a business. It is far wiser, I think, in a case of that 
kind, to sustain the independence and individuality of 



214 The Trust: Its Book 

the separate concerns. In that way you have the ad- 
vantage of the organizations that have created those con- 
cerns, and by an adjustment of compensation, based 
somewhat upon the earnings of those individual con- 
cerns, you sustain the individual interest that is essential to 
success. At the same time your central organization 
has the advantages of comparative accounting and com- 
parative administration, and is able to hold the separate 
concerns to a strict accountability, or, by appealing to 
their pride, to promote a healthy spirit of rivalry. In 
many cases it is my judgment that this idea of centraliza- 
tion can be carried too far, and that it is often much 
better to have these concerns run independently. Now, 
it may be said that you do not get the full benefits of 
centralization. That is very true. But, on the other 
hand, I believe you get a more efficient management 
than you would by centralization. Under that plan, 
through a system of comparative accounting, you are 
enabled to measure the different managements, and 
you can go a long way toward bringing the standard of 
all up to the standard of the best. 

Q. You spoke of comparative accounting as one 
method, and of arranging the pay of the superintendents 
in part by commissions on the profits of the business as 
another method. Are you inclined to think that those 
two methods may practically take the place of the regular 
competitive system, in the way of holding up the standard 
of excellence in work, and holding up also the interest of 
the superintendents? — A. I have not any doubt but 
that we can thus hold up the standard of quality. In 
most cases I think that the pride which a man, knowing 
that his work is being compared with others', has in 
handling his business successfully, together with the 
incentive given him by an interest in the profits of the 
business he is managing, keeps up the individual interest 
that exists where the person possesses a large ownership. 
But in many cases it does not. One of the fundamental 
difficulties of the management of these corporations lies 



Appendix 215 

in the fact that the managers have a smaller percentage 
of interest in the operations that they are conducting 
under the plan of an industrial combination than they 
had when it was an individual property, or when they 
had a large interest in a small corporation. That is 
fundamental. There is no way in which that condition 
can be changed. My experience has been that the best 
way to meet that condition is through an accurate system 
of comparative accounting, and in that accounting it is 
advisable not only to compare general results, but to 
compare details so as to find the cost of different parts 
of the process. At the same time it is advisable to have 
the managers interested in the profits of the business. 
That comes as near as possible to solving the difficulty. 
On the other hand, there are lines of business of such a 
character that they can be all handled from a central 
office. Such a business can be reduced to a very accurate 
system. For example, the manufacture of metals can 
probably be reduced to a more accurate system than the 
manufacture of rubber goods, since in the former there is 
no way in which you can utilize the chemist to any ex- 
tent. You can not lay down any positive rules as to 
chemical combinations, because those materials are con- 
stantly fluctuating, and there is such a great variety of 
conditions to meet that the business of manufacturing 
rubber goods must largely depend on local intelligence, 
and that necessitates high-class ability in the local man- 
agement. And such high-class ability is well paid. 
Sometimes the salaries of the chief executive officers are 
very small as compared with the earnings of local mana- 
gers. I know of cases where the payments to local mana- 
gers are three times what is paid to the chief officers of 
the corporation. 

Q. That does not hold where the industry is more 
concentrated, of course? — A. In case of concentration 
the big salaries are at the top. 

Q. That brings up another question in connection 
with the relations of the combinations to the labour 



216 The Trust: Its Book 

interests. We have already spoken of the relations of 
travelling salesmen; how about superintendents in your 
factories? When you make a combination are you 
generally able to save any considerable part of the cost 
of superintendence? — A. Only by centralized manufac- 
ture. There is some saving in superintendence, but that 
is not a large item. 

Q. The more the industry is concentrated the larger 
that item would become ? — A. Yes. 

Q. What is the attitude of combinations towards trade 
unions ? — A. We have never had a strike in any industry 
that I have been connected with, and that is the best 
evidence that we get on very well with our labouring men. 

Q. I wish you would consider a little further this ques- 
tion of the tariff. You spoke of it in considerable detail 
in reference to rubber manufacturing. How do you 
consider the tariff as related, for example, to the manu- 
facture of starch ? — A. Inasmuch as we are the cheapest 
producers of corn, and the manufacture of starch is con- 
ducted principally by machinery and not by hand labour, 
I think that the question of the tariff is of very little im- 
portance as relating to that industry. 

Q. As regards practically all the industries you have 
mentioned — the rubber, chicle, and starch — the tariff, 
then, has practically very little to do with them? — A. 
That is true. But in the case of rubber and rubber goods, 
and particularly the manufacture of boots and shoes, 
inasmuch as the great percentage of the labour is hand 
labour, the removal of the duty might force the company 
to manufacture its goods in Europe in order to avail 
itself of the cheaper labour of Europe. But in the case 
of the manufacture of starch, I think we get cheaper 
labour than we would get in Europe, because it is a ques- 
tion of the labourer occupying the position of overseer 
over machinery; and the American overseer being, in 
my judgment, a man of greater efficiency and higher 
intelligence than the European labourer, I think we get 
more for our money than they get in Europe. 



Appendix 217 

Q. The statement is frequently made that these larger 
combinations are able to put the prices of their goods 
unduly high on account of the protective influence of 
the tariff; and the suggestion is even made that the tariff 
should be removed in order to prevent the abuses of 
trusts along that line. What is your opinion on that 
question ?— A. In general, I think that every year our ex- 
port trade is going to become of greater importance, and 
I think we should tend to freer trade. The only danger 
that exists at present in international trade is the danger 
of a war of tariffs; and in revising duties the fact that 
these large consolidations are in a position to gain ad- 
vantages in manufacture through centralization should 
be taken into consideration. But any legislation that 
would discriminate against trusts in general would be 
most disastrous to labour interests and would create an 
industrial panic. 

Q. You think combinations have been useful and effi- 
cient in the way of stimulating export trade ? — A. I have 
no doubt of it; and the best evidence is the fact that the 
great bulk of our exports of manufactured goods is pro- 
duced by great combinations. 

Q. Do you think there is danger, on account of the tariff, 
of their keeping prices high enough here so as to make 
their profits secure, and then holding the foreign market 
by too low a reduction of prices to foreigners — selling 
abroad steadily considerably cheaper than they do here ? 
— A. That condition does not prevail. There are times 
when there is a surplus, when manufacturers will seek 
a foreign market at a concession. That is true in all 
manufacturing countries. It does not apply especially 
in the United States, but it is true in all countries. It is 
true in England, where there is free trade. 

Q. Is there any difference in that particular between 
trust-made goods and those made independent of trusts ? 
— A. No difference. On the contrary, there was far more 
of a disposition to make concessions before these combi- 
nations, from the fact that individual manufacturers 



218 The Trust: Its Book 

were more under the necessity to realize quickly. The 
great industrial combinations, by the great advantage 
they have in regulating production, avoid excessive pro- 
duction, and therefore are less likely to be under financial 
pressure. 

Q. (By Mr. Farquhar.) When you speak of a change 
in the tariff — any modification at all — do you think an 
advantage, however large theoretically, would practically 
justify the cutting of the tariff in two on any article ? Do 
you think it subserves the whole interests of the country 
to tinker with the tariff in that way ? — A. I think tinker- 
ing with the tariff has always been decidedly prejudicial 
to business interests. It creates unrest and uncertainty. 
Still, if there is to be a change, we should tend to freer 
trade. Considering the fact that we have a balance of 
trade in our favour of $650,000,000, in dealing with the 
world at large we can lower the wall of protection rather 
than put any more bricks on top of it. 

Q. How far would you lower the wall in the admission 
of foreign goods in competition with American work- 
men ? — A. I believe as a matter of national interest that 
wages should be sustained, but that in regulating the 
tariff there is no general rule that will apply. Many mat- 
ters must be taken into consideration. I do know, how- 
ever, that any legislation to reduce the tariff on goods 
made by combinations would be most unwise; and I can 
not imagine any action that would be more prejudicial 
to the labour interests of the country than that, because 
it would result in American manufacturers going to the 
cheapest labour markets in the case of goods in which 
hand labour is an important item of cost. 

Q. (By Mr. Clarke.) What effect would it have on 
the competing industries here — those that are outside 
of the combinations? — A. It would prejudice them to a 
greater extent than it would the combinations, from the 
fact that the former would have less financial ability to 
deal with a problem of that character. The corporations 
or combinations have surplus financial strength to deal 



Appendix 219 

with abnormal conditions, while the individual manu- 
facturer is, as a rule, using his facilities up to their full 
extent. 

Q. Do you think that, under any conditions, an in- 
crease of the export trade by reason of a modification of 
the American tariff which might discriminate against 
American wages would be an advantage? That is 
should we not rather seek a foreign market than main- 
tain and hold a home market ?— A. It is very important 
that we should have a widely distributed market. With 
a widely distributed market we are less subject to the 
effects of periods of contraction and expansion. I have 
noticed during periods of contraction that the manufac- 
turers who have had foreign markets have run their fac- 
tories and continued to have a satisfactory business, while 
the manufacturers who were dependent solely on the 
home market were under a very serious disadvantage 
Consequently I think it is very desirable that we should 
do everything possible to extend our markets abroad 
But there is no reason why we can not hold our home 
markets while extending our markets abroad. I do not 
see any substantial conflict of interest there. 

Q. (By Mr. Kennedy.) If there should come world- 
wide combination in any industry— and it has been more 
than hinted at in some cases— where would the manu- 
facturing be done? In the country where the labour is 
cheapest? Take the rubber industry for example.— A 
No; that is, if other conditions remain the same the 
manufacturing would be done in the countries where the 
merchandise could be produced to the best advantage 
with relation to the market for it, For instance, you 
have an example of what might almost be spoken of as a 
world combination in the Singer Sewing Machine Com- 
pany. They have, I understand, about 50,000 employes 
They are manufacturing in different parts of Europe and 
in the United States. They are manufacturing in the 
United States for the United States market. The con- 
ditions that prevail in that case would prevail generally 
because that is a case quite in point. 



220 The Trust: Its Book 

Q. If there were a world-wide combination in any in- 
dustry, the owners would not care whether there was a 
protective tariff in any country, would they? — A. No; 
but these combinations are limited by the impossibility 
of finding men of sufficient capacity to handle such an 
extended business. If one concern owned all the factor- 
ies in its branch of manufacture in the world, it would be 
immaterial as to whether there was a tariff or not so far 
as that industry was concerned, but it would be material 
to the labour interests of the country. 

Q. How far is monopoly maintained by crushing com- 
petition in its incipient state? — A, The only way that 
competition can be affected is by creating and maintain- 
ing facilities for the lowest cost of production. Industrial 
combinations, unless they are favoured by public fran- 
chises or by government patents, are subject to the law 
that "trade follows the price, and the lowest price makes 
the market. " 

Q. Does not a strong combination, already having 
control of the market and foreseeing competition from a 
new industry, have power to crush that new industry by 
underbidding it, even at a loss to itself, and thereby 
prevent that incipient corporation from developing into 
a rival? — A. The great combination is subject to very 
great disadvantages in a case of that kind. Inasmuch 
as the output of a great combination is so very large, a 
reduction of price of small account to the individual con- 
cern is of enormous account to the combination. There- 
fore the condition must be very exceptional where a great 
combination would reduce prices, because the loss would 
be very heavy and very great. But if the great combina- 
tion creates facilities for economic production, then they 
can hold a market by making a lower price to the con- 
sumer, and in my judgment when they have held a market 
in that way it results in the greatest good to the greatest 
number. 

Q. What is the effect on wages? — A. The effect on 
wages is, in my judgment, that they are to a very large 



Appendix 22i 



extent sustained owing to the advantage which we get in 
producing goods by the centralization of manufacture 
In making a market we figure up the cost. We say 
European wages are 40 per cent, less than ours As 

tiZl eeo ^ ^ \" adVanCe thr0U ^ combination 
through economic methods, through the use of specia 

Thle&cTo^h 6 P0SSi K Ie ^ CentraHz6d -^act- 
tat W K hCSe COmbmations * to give us an advan- 
tage that enables us to sustain wages in this country. 

for tW > S -f e , effeCt °" the P° ssibi lity of employment 
bLtiL T 1 Workmen? -A- At times these com- 

bmations, m order to produce under the most economic 
conditions throw workmen out of employment; but in 

otrio^nf Stat£S . there is suffi cient employmen during 
periods of prosperity (such as we are having now when 
these great industrial combinations are working under 
to fiZl , Vantage ° US C ° nditi0nS) to enabIe a worfln 

is ttt t7e P wT nt m ° ther lfaeS ' and the g eneral effect 
is that the workman gets more money for his work and 
he gets more produce for his money ' 

J?H A° y ° U , l"^* iS easy for a man wh ° h as worked a 

to anv otL°r V 1S hf V n "7 ° ne indUS ^ t0 ada Pt --self 
to any other me of employment ?-A. No; but I think 

of vlw S f T ' m l0 ° king at the ^ UeStion fr ™ the point 
■s TZ f 6 , greateSt g °° d fM the ^ test ™*"*. P here 
is a general advantage in the conditions that bring about 
a low cost of production. I think that is evidenced by 
leen T ■ ? *"£ ^^ ° f the WOrId ^re has never 

is !n th^n > Tf 6 Wage eamer WaS livin S as w cll as he 
is in the United States to-day 

indu^Z^ tWnk ^ iS dUe *° the combination of 
mdustnal enterprises or to combination among the work- 
men themselves ?-A. I think it is largely due tlThe 

StT T ting „ fn the C ° Unt ^ whi <* £« to a grit 
tTons b b tTl rOUght ab ° Utby th6Se ind -trial comolna- 
iZl £ I ^cognize the right of the wage earner to 

look after his interests. 

Q. That leads up to the point I wanted to bring out. 



222 The Trust: Its Book 

as to how far is there growing a community of interest 
between the employer and the employe in these large 
industries ? — A. I think there is a growing feeling on the 
part of the workmen that they are being benefited by 
the conditions which are making this a period of pros- 
perity. 

Q. Do you think there is a sentiment among the mana- 
gers of these corperations that it is wise to cultivate a 
friendly feeling with the workmen employed ? — A. I think 
so; and it is with great satisfaction that I am able to state 
that no industry with which I am connected, or ever have 
been connected, has had a strike. 

Q. You have spoken several times as to the benefits 
that come from these combinations. I wish you would 
call our attention to the evils of these combinations as 
they appear to you from your experience. You have 
already mentioned one danger in the lessening of a per- 
sonal interest on the part of the superintendents and man- 
ufacturers. Perhaps you can think of some other ? — A. 
Well, there is always the disadvantage that would result 
from the improper direction of a great combination — 
like a modern steamboat as compared with a canoe in 
case of misdirection. The responsibilities become very 
serious and, in general, unless substantial economies in 
production can be secured through combination, I think 
it is far better for the parties to run their business inde- 
pendently, because there is certainly a disadvantage in 
individuals turning over the management of their property 
to boards of directors. There comes a question of weigh- 
ing advantages and disadvantages; but it would appear 
from the many combinations that have been formed, 
and are still being formed, that those best able to judge 
have regarded the advantages as outweighing the dis- 
advantages. 

Q. Are you inclined to think that there are a good 
many lines of industry where combination would not be 
advisable ? — A. I think there are. In many cases I have 
refused to take part in assisting to bring about consolida- 



Appendix 223 

tions because I did not feel that there were any substantial 
economies to be secured. That is always the way I 
measure a proposition when it comes before me. At the 
very outset I study the question as to whether there are 
any important advantages to be secured by combination — 
advantages in reduced cost of production and distribu- 
tion — if not, I advise parties against entering into a com- 
bination or attempting it. 

Q. (By Mr. Clarke.) Mr. Carnegie wrote the com- 
mission that in his opinion the only danger from trusts 
is to the people who are in them. Does that suggest to 
you some possible danger that you have not mentioned ? — 
A. It is evident that while there is a centralization of 
manufacture going on there is a decentralization of 
ownership; that there are a hundred times as many people 
interested in our industrials now as there were twenty-five 
years ago, and there probably will be at the end of another 
ten years a hundred times as many more. So these in- 
terests are being more widely distributed. That is true of 
every industrial in which I am interested; and conse- 
quently it is a matter of very serious import to the in- 
vestors that these concerns should be managed in the 
interest of the stockholders. There is this fact, however, 
in thinking of one of the advantages I have not already 
mentioned: These combinations are giving the public op- 
portunities for profit that they would not otherwise possess. 
I had a calculation made showing the average earnings 
of 37 railroads to be 4 3-4 per cent, on the market price, 
and a little more than that on the par value of the securi- 
ties. If it had not been for the creation of these industrial 
securities I am satisfied that the percentage would have 
been considerably less. But in figuring the earnings of 
47 important industrials, and not including the Standard 
Oil Company, which has been an unusual success, I 
find that the average earnings on the capitalization is 
over 7 per cent., and that the earnings are over 11 per 
cent, on the present market price of the industrials. So 
the profits of these industrial combinations are being 



224 The Trust: Its Book 

very widely distributed. But, on the other hand, these 
investors are to a considerable extent dependents on the 
management. 

Q. (By Mr. Jenks.) I suppose, speaking generally, a 
controlling amount of the stock is held in a few hands 
in practically all combinations? — A. Not a majority; 
but, as a rule, in most of the industrials the managers are 
the larger stockholders. 

Q. (By Mr. Litchman.) The more widely extended 
the ownership, the more serious and far-reaching the 
disaster in case there is dishonest or inefficient manage- 
ment? — A. Yes. But we have arrived at a point now 
where a disaster to one or two industrials is not going to 
seriously affect the entire industrial situation. The 
failure of Cordage in the spring of 1893 discredited almost 
every industrial then existing; but there are so many 
industrials now that have been organized and the system 
is so well understood, that a disaster to any one or two 
industrials would not create any general depression in 
industrial interests. 

Q. I have seen recently that those who are champion- 
ing industrial combinations claim that one of the results 
will be that production will be so controlled that there 
will be no overproduction and there will be no panics in 
the future. Do you think that will be one of the future 
results of these industrial combinations? — A. I think 
they will go a long way toward preventing panics. 

Q. (By Mr. Jenks.) Speaking generally, and without 
reference to these combinations you yourself have repre- 
sented, do you consider that there has been any particu- 
lar evil to the country from overcapitalization in these 
industries? — A. I think there have been many cases of 
overcapitalization that have been very prejudicial. In 
many it has had a salutary effect. It has made investors 
less careless. I think that many of them will be more 
careful in making investments. The best evidence that 
there has been in many cases decided overcapitalization 
and also a bad management is the present market prices 



Appendix 225 

of certain shares, and I think that the result has been 
that the investors will be more careful. It is my opinion 
that the banking houses who have endorsed unsound 
capitalizations have been discredited to such an extent 
that they cannot repeat the operation. Speaking gen- 
erally as regards the capitalization of these industries, it 
seems to me that care should be taken to protect the 
senior securities, which are regarded as investment se- 
curities. The common stock, although its amount may 
appear large, is well known as a rule to represent good 
will. The word "common" is engraved in big letters 
across the face of it, and people in general have noticed 
that that is not as a rule investment security at this time. 
I have no question but that in time many of these in- 
dustrial securities — many common stocks to-day might 
be classed as speculative securities — will become invest- 
ment securities, as are to-day our railroad shares that 
were originally issued for good will. In general I have 
no doubt that the public have been benefited by these 
capitalizations. They are, in my judgment, receiving 
double the income that they would get if these industrial 
securities had not been created. Formerly the great 
manufacturing interests were in a few hands, and to-day 
there has been a wide distribution. Of course when you 
hear of some of the profits that have been made by organ- 
izers and promoters, they seem large in amount. But 
if you want to have an industrial combination created, 
it will not be an easy matter to find a man of sufficient 
ability and financial responsibility to take it up. There 
has to be an inducement offered, because it involves a 
risk, a very high class of work; and I think that men who 
go to New York to-day to interest people in forming 
industrial combinations do not find it an easy matter. 

Q. Perhaps you can take a moment to tell us whether 
you think any legislation in relation to these industrial 
combinations would be desirable; and if so, of what 
nature it should be ? — A. My idea is that affairs of trade 
are best regulated by natural laws. It is very difficult 



226 The Trust: Its Book 

to suggest legislation of any radical character that can 
supplant to advantage the natural law of supply and 
demand. For instance, the courts in Germany have 
sustained the agreements which we call restraint of trade 
agreements. The result of this has been that there have 
been fewer combinations in Germany. In this country 
laws have been passed against agreements between cor- 
porations for the purpose of regulating trade. "Well, 
that very legislation has had a tendency to force organiza- 
tion of industrial combinations. The legislators who 
formulated the restraint of trade laws did not anticipate 
that those very laws would be one of the strongest reasons 
for bringing about the organization of industrial combi- 
nations. The idea has been suggested of creating con- 
ditions to limit the compensation of those who organize 
industries; but if, as I know it to be a fact, it is difficult 
to get bankers of strength or ability to take up that class 
of work now, while there is no restriction, it would make 
it still more difficult if there were restrictive legislation. 
While I think it is desirable that there should be a system 
sustained for proper auditing and accounting, and regu- 
lation as to the issuing of securities, the evils which have 
developed in connection with the organization of in- 
dustries are being corrected by natural laws. The care- 
less banker has lost his reputation; the careless investor 
has lost his money; and the result of it is greater caution 
all around. The fact is that we have been, in a way, 
passing through a period of education. Every day the 
people in general are becoming educated as to these or- 
ganizations. This commission is doing valuable work 
in that direction. As combinations are better under- 
stood they will be organized on a sounder basis and will 
have more intelligent management. 

(Testimony closed.) 



III. 

A LIST OF BOOKS RELATING TO TRUSTS 

Adams, Charles Francis. The place of corporate action 
in our civilization. 

(In Shaler, N. S.: The United States of America, vol. 2, 

pp. 191-213. New York, 1894) 
"Considers 'Trusts;' the 'Standard Oil Company,' etc." 

Adams, Edward F. The modern farmer in his business 
relations. 
San Francisco: N. J. Stone company, 18 gg. 8°. 
'The farmer and the trusts," pp. 398-412. 

Adams, Francis Alexander. Who rules America? Facts 
and figures regarding the four hundred trusts 
that prey upon our people. 
New York, i8gg. jg pp. 8°. 

Adams, Henry C. Relation of the state to industrial 
action. 
[Baltimore]: American economic association. Pub- 
lication, vol. 1, no. 6. 

American academy of political and social science. 
Corporations and public welfare. Addresses at 
the fourth annual meeting, Philadelphia, April 
19-20, 1900. 
New York: Published for the American academy of 
political and social science. McClure, Phillips & 
Co., 1 goo. 208 pp. 8°. 

CONTENTS. 

Pt. I. The control of public-service corporations; In- 
troductory: The possibilities and limitations of municipal 
control, by L. S. Rowe; Financial control, capitalization, 
methods of accounting and taxation, by B. S. Coler 
Difficulties of control as illustrated in the history of gas 
companies, by J. H. Gray; Regulation of cost and qual- 

227 



228 The Trust: Its Book 



ity of service as illustrated by street-railway companies, 
by F. W. Spiers. 

Pt. II. Influence of corporations on political life, by 
William Lindsay. 

Pt. III. Combination of capital as a factor in industrial 
progress ; Industrials as investments for small capital, by 
J. B. Dill; The evolution of mercantile business, by John 
Wanamaker; The interest of labour in the economics of 
railroad consolidation, by W. H. Baldwin. 

Pt. IV. The future of protection; The industrial ascen- 
dency of the United States, by N. W. Aldrich; The tariff 
policy of our new possessions, by R. P. Porter; The 
next step in tariff reform, by C. R. Miller; Report of 
the Academy committee on meetings. 

American social science association. The Chicago 

"trust" conferences. Being a report by the 

Committee appointed to represent the association. 

In American social science association. Journal no. 37, 

December, 1899, pp 245-256. 

Apthorp, Henry. "Trusts" and their relation to indus- 
trial progress: an address before the Economic 
League of Ashtabula, Ohio. 
Akron, Ohio: The Werner company, 18 gg. 27pp. 8° 

Aschrott, P. F. Die amerikanischen Trusts als Weiter- 
bildung der Unternehmerverbande. 
Tubingen, i88g. H. Laupp. (2) , 36 pp. 8°. 

Austria. Trusts in Austria. Copy of bill recently intro- 
duced in the Reichstag for the supervision of 
trusts controlling the price of sugar, brandy, beer, 
oil from minerals, etc., June 14, 1897. 

In United States Consular reports, vol. 55, pp. 47-50. 
Baker, Charles Whiting. Monopolies and the people. 
3rd edition, revised and enlarged. 
New York & London: G. P. Putnam's Sons, i8gg. 
xxiii, (2), 368 pp. 12 . 

Beach, Charles Fisk, sr. A treatise on the law of monopo- 
lies and industrial trusts as administered in Eng- 
land and in the United States of America. 
St. Louis: Central Law Journal company, i8g8. 
lxx u (2) , 760 pp. 8°. 



Appendix 229 

Beach, Charles Fisk, jr. Company law. Commentaries 
on the law of private corporations, whether with 
or without capital stock, also of joint stock com- 
panies and of all the various voluntary unincor- 
porated associations organized for pecuniary 
profit or mutual benefit. 
Chicago: T. H. Flood & company, 189 1. 2 vols. 8°. 



— The problem of the vanishing profit. An address 

on railway and commercial trusts and combina- 
tions . . . before the Congregational club of 
the city of New York, January 19th, 1891. 
[New York, 1891.] 16 pp. 12 . 

The trust, an economic evolution; an address at 

the Union League Club, Chicago, March 30, 
1894. 
New York: 8°. 

Bell, George W. The new crisis. 

Des Moines, Iowa: Moses Hull & company, 1887. 

X, 35I pp. 12°. 

Bemis, Edward W., ed. Municipal monopolies: A collec- 
tion of papers by American economists and 
specialists. 

New York: Thomas Y. Crowell& company. [1899.] 
ix, (1) , 691 pp. Folded sheets. 12°. 

Benedict, Roswell A., ed. Settling the tariff -trust ques- 
tion. A debate. Arguments on both sides fully 
reported, with plans for final settlement of the 
question and its removal from politics, to the 
advantage of American industry and commerce. 
New York: 1900. vi, (6), 117 pp. 12 . 

Bland, Thomas A. The reign of monopoly. 

Washington, D. C: Rufus H. Darby, 188 1. 48 
PP. 8°. 



230 The Trust: Its Book 

Bliss, William D. P., ed. Encyclopedia of social reform. 
New York and London: Funk & W agnails company, 
1897. viii, 1439 pp. 8°. 

Trusts, pp. 1 346-1 348; Monopolies, pp. 888-894; Standard 
oil monopoly, p. 1285; Plutocracy, pp. 1012-1016. 

Bonham, John M. A brief history of the Standard oil 
trust. Its method and its influence, [anon.] 
No title-page. [1888?] 23 pp. 8°. 

— Industrial liberty. 

New York and London: G. P. Putnam's Sons, 1888. 
ix, (1), 414 pp. 8°. 

"The relations of the railway and the 'trust* to industrial 
liberty," pp. 96-128. 

"The influence of the 'trusts' and other parasites upon in- 
dustrial liberty," pp. 129-158. 



Railway secrecy and trusts. 

New York and London: G. P. Putnam's Sons, 18 go. 
138 pp. 12 . (Questions of the day, no. 61.) 

Bouroff, Basil A. The Impending crisis. Conditions 
resulting from the concentration of wealth in the 
United States. 
Midway Press Committee, publishers. Chicago. 
1 poo. ix, (1), 196 pp. 12°. 

Brouilhet, Charles. Essai sur les ententes commerciales 
et les transformations qu'elles pourraient appor- 
ter dans l'ordre economique actuel. 
Paris: Guillaumin et cie., 1895. (2), 211 pp. 8°. 

Call, Henry L. The coming revolution. 

Boston: Arena publishing company, 1895. (4), 
233 PP. 8°. 

Canada. House of Commons. Report of the select com- 
mittee, appointed 29th February, 1888, to in- 
vestigate and report upon alleged combinations 
in manufactures, trade, and insurance in Canada. 
Submitted 16th May, 1888. 



Appendix 231 

Ottawa: Printed by Maclean, Roger & company, 
1888. xxv, (1), 750 pp. 8°. 

Also printed as Appendix 3 of House of Commons Journal, 
1888. 

Carnegie, Andrew. The gospel of wealth, and other 
timely essays. 
New York: The Century Co., 1900. xxii, (2), 
305 pp. 8°. 

"Popular illusions about trusts," pp. 83-T03. 
The Empire of business. 

New York : Doubleday, Page & Co., 1902. 346 pp. 8°. 
"The bugaboo of trusts," pp. 153-170. 

Chicago conference on trusts. Speeches, debates, 
resolutions, list of the delegates, etc. Held 
September 13th, 14th, 15th, 16th, 1890. 
Chicago: The Civic Federation of Chicago, 1900. x, 
626 pp. Portraits 8°. 

CONTENTS. 

A statement of the trust problem, by Henry C. Adams; 
How to judge the right of the trusts to live, by J. Dana 
Adams; Address of welcome, by Edward C. Akin; 
Benefits and hardships of combinations, by G. W. Atkin- 
son; Trusts an early incident, but no longer the product 
of present prosperity, by Henry D. Baker; Trust evils 
and suggested remedies: A problem for a generation to 
settle, by Edward W. Bemis; The tariff not mother of 
trusts, but mother of American wealth and power, by 
Henry W. Blair; Trusts a natural industrial feature and 
should not suffer legislative restraint, by Charles J. 
Bonaparte; Are the new combinations socially danger- 
ous? by John Graham Brooks; The man before the dol- 
lar: Society not enthralled to an institution solely be- 
cause the institution exists: The remedy of Congressional 
license, by William Jennings Bryan; Reply to Mr. 
Foulke, by William Jermings Bryan ; The trust as a con- 
spiracy against civilization, by I. D. Chamberlain; The 
necessity of restraining monopolies while retaining 
trusts, by John Bates Clark; Effect produced by com- 
binations, whether of capital or labour, upon the general 
prosperity of the community, by W. Bourke Cockran; 
Reply to Mr. Bryan and answers to various questions, 
by W. Bourke Cockran; Committee on organization 



232 The Trust: Its Book 

and program ; Committee on resolutions ; Neglect of the 
old principle of "public benefit" in recent corporation 
laws, by John B. Conner; Trusts: their abuses and 
remedies, by Stephen P. Corliss; Restraint of the cor- 
poration, by E. C. Crow; The Arkansas anti-trust law, 
by Jefferson Davis; Overcapitalization and concealment, 
by James B. Dill; Trusts and their effects upon com- 
mercial travellers, by P. E. Dowe; The advantages of 
rightful combination, by James W. Ellsworth; The 
economic history of a long established factor in Ameri- 
can transportation, by Stuyvesant Fish; A plea for 
moderate action, by "William Fortune; Desirability of 
trusts, by Charles Foster; Why trusts cannot be entirely 
overthrown, by William Dudley Foulke; In criticism of 
certain views of William J. Bryan, by William Dudley 
Foulke; Maryland and the trusts, by George R. Gaither, 
jr. An iron and steel worker's view of combination, by 
M.M. Garland ; The control of trusts, by Samuel Gompers ; 
Railroad responsibility for objectionable combinations; 
The farmers and the Chicago grain market, by S. H. 
Greeley; The trust as a phenomenon to be handled fear- 
lessly and utilized for the public weal, by Laurence Gron- 
lund ; The public and the trusts, by George Gunton ; Fed- 
eral control by explicit and comprehensive statute, by F. 
E. Haley; Foreign markets and American shipping: Ex- 
tension of competition for agricultural relief, by J. C. 
Hanley; Causes, dangers, and benefits of combinations, 
by Azel F. Hatch; The social enemy, by John "W. Hayes ; 
Introductory address, by Franklin H. Head; Tariff the 
mother of trusts, by Byron W, Holt ; Formulation, by 
permanent chairman of the conference, of certain sug- 
gested methods for the solution of the trust problem, 
William Wirt Howe ; Fire insurance co-operative, but 
not a trust: Its relation to the community, by E. C. 
Irwin; Elements of the trust problem, by Jeremiah W. 
Jenks ; Federal and State regulation of trusts, by Aaron 
Jones ; The trust as a labour-saving machine in the devel- 
opment of a large programme, by Samuel M. Jones; New 
Jersey and trusts, by Edward Quinton Keasbey; Analy- 
sis of industrial statistics collected by the Civic Federa- 
tion of Chicago, by David Kinley; Equality of rights in 
transportation agencies, by Martin A. Knapp ; Property 
rights and human rights, by M. L. Lockwood; The 
farmer: The man who can declare his "Live and let 
live" policy at the ballot box, by Cyrus G. Luce; Com- 
binations in the main beneficial, by Emerson McMillin: 
Recognition of the inevitable and adjustment thereto, 
by S. A. Martin; The trust from a socialist point of view 



Appendix 233 

by Thomas J. Morgan; No monopoly where trade and 
commerce free, by J. Sterling Morton; Railroad co-opera- 
tion more economic than unrestricted competition, by 
Paul Morton; Practical remedies for industrial trusts, 
by G. W. Northrup, jr.; The limitation of competition 
and combination as illustrated in the regulations of rail- 
roads, by Joseph Nimmo, jr.; Federal taxation as a 
means of regulation, by Francis G. Newlands; Where 
competition is present discrimination can not be absent: 
An argument for the restoration of of the pooling privi- 
lege with Federal supervision, by H. T. Newcomb; The 
menace of monopoly, by Henry W. Peabody ; The effect 
of trusts on our national life and citizenship, by Hazen 
S. Pingree; A letter to Professor George Gunton, by 
Hazen S. Pingree; "Where single taxers stand: The lesson 
of the giant with his feet on the ground, by Louis F. 
Post; Consolidation a natural growth with many obvi- 
ously good results, by W. P. Potter; The wrong of special 
privilege, by Lawson Purdy; Monopolies under patents 
and the industrial effects thereof, by James H. Ray- 
mond ; How consolidation has worked out in the case of 
one of the great common carriers, by Edward P. Ripley; 
The antidote of free trade and the international trust, 
by Samuel Adams Robinson; Historical development 
of the corporation, with exclusion of the principle of 
public benefit, by A. E. Rogers; Legislative discipline to 
make trusts harmless, by Edward Rosewater; Combina- 
tions the inevitable incidents of industrial evolution, by 
David Ross; The greatest problem since slavery, by U. 
M. Rose; Trusts and free trade, by John F. Scanlan; 
Competition the best regulator, by Charles A. Schieren; 
Strength of the trusts in props of special privilege, by 
George A. Schilling; Corporate ownership of railroads 
the backbone of the trust; protective tariff its right arm, 
by J. G. Schonfarber; Excessive financial energy, by 
Horatio W. Seymour; Explanation of the new trades 
combination movement in England, by E. J. Smith; 
The right of a state to regulate all corporations doing 
business within it, by T. S. Smith; The free list and a 
graduated corporation tax as trust remedies, by John 
W. Spencer; A farmer on trusts; Regulation from the 
protectionist's standpoint, by John M. Stahl; A criti- 
cism of the Smithsonian system of trades combinations: 
Reform without an economic feature, by A. W. Still; 
The economic advantages of combination, by Clement 
Studebaker; The relation of an unstable currency to the 
formation of trusts, by H. H. Swain; The main problem: 
How shall we distinguish among corporations? by 



234 The Trust: Its Book 

Robert S. Taylor; The bogey monster: A thing to be 
regulated and encouraged, by F. B. Thurber; The atti- 
tude of anarchism toward industrial combinations, by 
Benjamin R. Tucker; The legal status of combinations 
of labour, by William H. Tuttle; Protection and trusts, 
by Thomas Updegraff; Trusts from a business man's 
standpoint, by T. B. Walker; Efficacy of economic 
checks in regulating competitive trusts, by James R. 
Weaver; The combination in history, ethics, and politi- 
cal economy: Should it be prevented by law? by A. 
Leo Weil; A period of doubt and darkness in a new in- 
dustrial era, by Henry White; The trust as a logical 
development impossible to extinguish and difficult to 
regulate, by C. D. Willard; Principles and sources of 
the trust evil as Texas sees them, by Dudley G. Wooten ; 
The trust: An institution prouounced by the United 
States Supreme Court, in 1895, beyond Congressional 
control, by John I. Yellott. 

Chicago trust conference. Trusts pro and con, being 
a detailed report of the Chicago trust conference 
held in Chicago, September 13-16, 1899, under 
the auspices of the Civic Federation: W. Bourke 
Cockran vs. William Jennings Bryan. 
Chicago: George M. Hill co., [i8pp]. 182 pp. 
Illustrations {woodcuts) . 12°. (Marguerite ser- 
ies, no. 156.) 

Clark, John Bates. Capital and its earnings. 

[Baltimore]: American Economic Association. Pub- 
lications, vol. 3. no. 2. [1888.I 

The control of trusts. An argument in favour of 

curbing the power of monopoly by a natural 
method. 
New York: The Macmillan company, igoi. x, (2), 
88 pp. 12°. 

"The only control of trusts that the public can supply, he 
thinks, is by insuring opportunity for this potential 
competition to become actual whenever conditions jus- 
tify it. His remedy, then, is simply the application of 
the common law against monopolies, enforced by statute 
law if necessary. 






Appendix 235 

Cloud, D. C. Monopolies and the people. 

Davenport, Iowa: Day, Egbert & Fidlar, 1873. (2) , 
iv, 462 pp. 8°. 

Same. 3d edition. 

Davenport, Iowa: Day, Egbert & Fidlar, 1873. 
514, iii pp. 8°. 

Cole, Casca St. John. Book of trusts. 

Minneapolis: Traveling Men's Anti-Trust League, 

IQOO. 64 pp. 24°. 

Collier, William Miller. The trusts. What can we do 
with them ? What can they do for us ? 
New York: The Baker and Taylor company, [igoo], 
», (*). 338 pp. 12 . 

Cooke, F. H. The law of trade and labour combinations 
as applicable to boycotts, strikes, trade conspira- 
cies, monopolies, pools, trusts. 
Chicago: Callaghan & co., 1898. 214 pp. 8°. 

Commercial year book, The. A statistical annual . . . 
Edited by Walter A. Dodsworth . . . Vol- 
ume V. 

New York: The Journal of Commerce and Commer- 
cial Bulletin, 1000. (6), 674 pp. 

"Industrial consolidations and large corporations of 1899," 
pp. 560-564; "Corporate consolidations of forty years," 
pp. 564-569. 

Vol. VI. [1901.] Industrial consolidations, pp. 

487-491. 

" Combines and trusts," 532-533.. 

Commons, John R. The distribution of wealth. 

New York and London: Macmillan & company, 

l8 Q 3. X, 2 $8 pp. 12°. 

Cook, William Wilson. The corporation problem. The 
public phases of corporations, their uses, abuses, 
etc. 
New York: G. P. Putnam's Sons, i8qi. vi, 262 

pp. 12°. ' 



236 The Trust: Its Book 

Cook, William Wilson. "Trusts." The recent combi- 
nations in trade, their character, legality, and 
mode of organization, and the rights, duties and 
liabilities of their managers and certificate- 
holders. 2d edition. With supplement. 
New York: L. K. Strouse & Co., 1888. (6), 113 
pp. 12°. 

Cooke, Fredric H. The law of trade and labour combina- 
tions as applicable to boycotts, strikes, trade 
conspiracies, monopolies, pools, trusts, and kin- 
dred topics. 
Chicago: Callaghan and company, 18 q8. xxv, (i), 
214 pp. 8°. 

Cossa, M. I sindicati industriali (trusts). 
Milan: Hoepli, 1901. 186 pp. 8°. 

Crozier, John Beattie. History of intellectual develop- 
ment: on the lines of modern evolution. Vol. 3. 
Longmans, Green, and co., New York and Bombay, 
1 901. xiv, (2) , 355 pp. 8°. 

Dill, James B., compiler. General corporation act of New- 
Jersey, with other general acts relating to busi- 
ness corporations. 4th ed. 
New York: Baker, Voorhis & co., 1901. xiv, 
244 pp. 8°. 

The statutory and case law applicable to private 

companies under the general corporation act of 
New Jersey and corporation precedents. 3d ed. 
New York: Baker, Voorhis & co., 1901. xxx, 
381 pp. 8°. 

Dillaye, Stephen D. Monopolies; their origin, growth 
and development. 
Washington, D. C: Rufus H. Darby, 1882. 95 
pp. 8°. 
Dodd, S. C. T. Combinations; their uses and abuses. 
With a history of the Standard oil trust. 
New York ■ G. F. Nesbitt, 1894. 45 pp. 8°. 



Appendix 237 

Dos Passos, John R. Commercial trusts. The growth 
and rights of aggregated capital. An argument 
before the Industrial Commission, December 12, 
1899; corrected and revised. 
G. P. Putnam's Sons, New York & London, igoi. 
viii, (2), 137 pp. 12 . 

The growth and rights of aggregated capital. 

Argument before the Industrial Commission at 
Washington, D. C, December 12, 1889. 
{New York, igoi?] 71 pp. 8°. 

Duchaine, Paul. La question des trusts. 
Bruxelles: Ad. Mertens, igoo. 8°. 

Eddy, Arthur J. The law of combinations, embracing 
monopolies, trusts, and combinations of labour 
and capital; conspiracy, and contracts in re- 
straint of trade. 
Chicago: Callaghan & co., 1 goi. 2 vols. 8°. 

Ely, Richard T. Monopolies and trusts. 

New York: The Macmillan company, igoo. xi, (3) 
2 73 PP> I2 °' (The Citizen's Library.) 

— Problems of to-day; a discussion of protective 

tariffs, taxation, and monopolies. 
New York: T. Y. Crowell & company, 1888. 222 

pp. 12°. 

Senior's theory of monopoly. 

{In American Economic Association. Publications, 3d 
series, vol. 1, pp. 89-102. New York, 1900.) 

The tariff and trusts. 

{In Shaw, Albert, ed.: The national revenues, pp. 56-67. 
Chicago, 1888.) 

Farrer, T. H. The State in its relation to trade. 

London: Macmillan company, 1883. xi, (1), 179 
pp. 12°. (The English Citizen.) 

Flora, Frederico. I sindicati industriali (trusts). 
Torino: Roux etViarengo, igoo. 4.8 pp. 8°, 



238 The Trust: Its Book 

Garelli, A. Filosofia del monopolio. 

Milano: U.Hoepli, 1898. 268 pp. 8°. 

Genart, Charles. Les syndicats industriels. 

Paris: L. Larose, 1896. 232 pp. 12 . (Ecole 
des sciences politiques et sociales de Louvain.) 

Getz, Paul. Das Branntweinmonopol als Besteuerungs- 
form. 
Jena: Gustav Fischer, 1897. (6), 81 pp. 8°. 

Giddings, Franklin Henry. Democracy and empire. 

New York: The Macmillan company, 1900. x, 
363 pp. 8°. 

"The trusts and the public," pp. 135-164. 

New York: G. P. Scott & Co., 1835. 40 pp. 8°. 

Goens, D. van. De monopoliis. 

Trajecti: ar Rhenum, 1743. 59 pp. 8°. 

Great Britain. Foreign Office. (1890). Miscellaneous 
series no. 174. Report on the constitution, 
attributes, and legal status of "Trusts" in the 
United States. 
London, 1890. 99 pp. F°. 

{In Great Britain Parliamentary Sessional papers, 1890, 
vol. 73.) 

Griffin, A. P. C. A list of books relating to trusts. 
Washington: Government Printing Office, 1902. 

Grinnell, William Morton. The regeneration of the 
United States. A forecast of its industrial evo- 
lution. 
G. P. Putnam's Sons, New York & London, 1899. 
iv (2) , 145 pp. 12 . {Questions of the day, no. 95.) 

Gunton, George. Principles of social economics induc- 
tively considered and practically applied with 
criticisms on current theories. 
G. P. Putnam's Sons, New York, London, 189 1. 
xxiii, 447 pp. 8°. 
"Combinations of capital," pp. 397-4I4* 



Appendix 239 

Gunton, George. Trusts and the public. 

New York: D. Appleton, igoo. 256 pp. 12 

Hadley, Arthur Twining. Economics. An account of 
the relations between private property and public 
welfare. 
G. P. Putnam's Sons, New York, London, i8gg. xi, 
(j), 496 pp. 8°. 
"Competition," pp. 64-96; "Combinations of capital," 
pp. 151-179. 

Railroad transportation: its history and its laws. 

New York and London: G. P. Putnam's Sons, 1885. 

v, (i),26g pp. 12 . 

"Competition and combination in theory and practice," 
pp. 63-99. 

Halle, Ernst L. von. Trusts, or industrial combinations 
and coalitions in the United States. 
New York: Macmillan & co., i8g$. xvi, 450 pp. 
2 folded charts. 12°. 

Same. 

New York: The Macmillan company, 18 gg. xvi, 
35° PP' 2 folded charts. 12°. 

Hardesty, Jesse. The mother of trusts. Railroads and 
their relation to "the man with the plow. " 
Kansas City, Mo.: Hudson-Kimberly publishing 
company, [i8gg]. 262 pp. 12 . 

Same. Revised edition. 

Kansas City, Mo.: J. Hardesty, 1900. 218 pp. 12 

Harding, E. E. Aggressive common sense concerning 
mutual interests and relations of American farm- 
ers and wage-earners vs. private monopoly and 
trusts, or Rights of working people in the dawn of 
the twentieth century. 
[Tracy, Minn.: E. E. Harding, igoi.] 106 pp. 12° 

Harper, William Hudson, editor. "Restraint of trade." 
Pros and cons of trusts in facts and principles. 



240 The Trust: Its Book 

A handbook for the man who wants to think clear 
and vote right. 
Printed for the editor by the Regan printing house, 
Chicago, i goo. xvi, j68 pp. 8°. 

Harvey, W. H. Coin on money, trusts, and imperialism. 
Coin publishing company, Chicago, [i8gg]. 184 pp. 
Illustrations {wood-cuts). 12 . 

Hewins, W. A. S. English trade and finance chiefly in the 
seventeenth century. 
Methuen & Co., London, 18Q2. xxxv, (i), 174 pp. 

12°. 

"The monopolies," pp. 1-11. 

"The monopolies and modern industrial changes," pp. 
12-13. 

History of a pool. Reprinted from the Iron Agvj. 

New York: David Williams company [i8g8]. iog 

PP. 12°. 

Hobson, J. A. The economics of distribution. 

New York: The Macmillan company, igoo. vii, 

The evolution of modern capitalism. A study of 

machine production. 
London: W. Scott, i8g4. xiv, 388 pp. 12 . 

The social problem. Life and work. 

London: James Nisbet & co., igoi. x, (2), 2g$ pp. 
8°. 

"Public and private industry," pp. 174-186. 

Holt, Byron W. Trusts versus wages. 

New York, i8g2. ig pp. 8°. {Tariff Reform, vol. 
5, no. 17.) 

Holt, Henry. Talks on civics. 

New York: The Macmillan^-company, igoi. xxvi, 
493 PP. 12 . 

Discusses trusts, municipal ownership, etc. 



Appendix 241 

Hopkins, L. L. The coming trust. 

New York: Advance publishing company, iqoo. 

(4), 154 PP> 12°. 

Hudson, James F. The railways and the republic. 

New York: Harper & Brothers, 1886. (4), 48 Q 
pp. 8°. 

"Competition v. combination," pp. 207-315 - 

Jeans, J. Stephen. Trusts, pools and corners as affecting 
commerce and industry. An inquiry into the 
principles and recent operations of combinations 
and syndicates to limit production and increase 
prices. 
London: Methuen & co., 18Q4. viii, igo pp. 12 . 
{Social questions of to-day.) 

Jenks, Jeremiah Whipple. The trust problem. New and 
revised edition. 
New York: McClure, Phillips & co., iqoi. xix, 
(J), 341 pp. Diagrams. 12 . 

Trusts and industrial combinations. 

(In United States Department of Labour, Bulletin, vol 5. 
no. 29, pp. 661-831. Washington, 1900.) 

Jennings, Edwin B. Democracy and the trusts. 

The Abbey press, New York, London [etc.]: [igoo]. 
(2), 6j pp. 12 . 

People and property. 

The Abbey press, New York, [igoo], log pp. 12°. 

Katzenstein, Louis. Die Trusts in den Vereinigten 
Staaten. Vortrag, 9 Januar, igoi. 
Berlin: Leonhard Simion, igoo. Hi, 31 pp. 8°. 

Keasbey, Edward Quinton. New Jersey and the great 
corporations. 

(In American Bar Association. Reports vol. 22, pp. 379- 
413. Philadelphia, 1899.) 



242 The Trust: Its Book 

Kinley, David H. Trusts. 

Chicago: [1899]. 66 pp. Portraits. 8°. {Pro- 
gress. Issued monthly by the University Associa- 
tion in the interests of university and world's con- 
gress extension, vol. 5, no. 1.) 

Kleinwaechter, F. . Die Kartelle: ein Beitrag zur Frage 
der Organisation der Volkswirthschaft. 
Innsbruck, 1883. 8°. 

Kuehn, E. Das Getreidemonopol als Sociale Massregel. 
Leipzig: F. W. Grunow, 1896. 123 pp. 12°. 

Eangstroth, Charles S., and Wilson Stilz. Railway co- 
operation; an investigation of railway traffic 
associations and a discussion of the degree and 
form of co-operation that should be granted 
competing lines in the United States. With an 
introduction by Martin A. Knapp. 
Philadelphia, 1899, xv, 210 pp. 8°. (University 
of Pennsylvania publications: Political economy 
and public law series, no. 15.) 

Le Rossignol, James Edward. Monopolies past and 
present. An introductory study. 
New York: Thomas Y. Crowell & company, [1901]. 
vii, (1), 256 pp. 8°. 

[Lewis, B. B.] A talk about "trusts." A short and in- 
formal talk about the " Trusts" and its disastrous 
aspect toward the present economic and social 
status. Submission ? or sequestration ? Which ? 
[Bridgeport, Conn., 1889.] (16) pp. 12 . 

Liefmann, R. Die Unternehmerverbande. 

Frieburgi. B.: J. C. B. Mohr, 1897. 199 pp. 8°. 

Die Allianzen, gemeinsame monopolitische Vere- 

inigungen der Unternehmer und Arbeiter in 
England. 
Jahrbilcher fur Nationalokonomie und Statistik, III. 
Folge, vol. 20 (Oct., 1900): 433-477. 



Appendix 243 



CONTENTS. 

I. Kartelle und trusts in England. 
II. Die Entstehung der Allianzen. 

III. Die Organisation und Wirksamkeit der Allianzen. 

IV. Die bisherigen Erfolge der Allianzen. 
Die Weiterentwickelung der Allianzen. 

Lloyd, Henry Demarest. Wealth against commonwealth. 
New York: Harper & Brothers, 18Q4. iv, 563 pp. 
8°. 

Lusk, Hugh H. Our foes at home. 

New York: Doubleday & McClure company, 18 gg. 
(6),2 9 7pp. 12°. 

Littleton, Alfred. The law of trade combinations. 

(In Mackay, Thomas, ed.; A policy of free exchange, pp 
275-292. New York, 1894. 8°.) 

McLin, Robert O. The trust family. 

Published by the author, Kansas City, Mo., 18 gg. 
168 pp. 16 . 

Macrosty, H. W. Trusts and the state: a sketch of com- 
petition. 
London: Richards, igoi. 318 pp. 8°. 

Mann, E. D. The trusts and the people. 

New York: Town Topics publishing company. 
8 pp. 8°. 

Marshall, Alfred. Principles of economics. Vol. 1. 

London: Macmillan and co., i8go. xxviii, 754 pp. 
Diagrams. 8°. 

"The theory of monopolies," pp. 456-472. 

Martin, Edward Winslow. History of the grange move- 
ment; or, the farmer's war against monopolies. 
Illustrated with 60 engravings and portraits of 
leading grangers. 
National publishing company, Philadelphia [etc.], 
W73l 539 PP- 8*. 



244 The Trust: Its Book 

Mason, Augustus Lynch. Trusts and public welfare. 

Indianapolis: The Hollenbeck press, igoi. 42 pp. 



Miller, J. Bleecker. Trade organizations in politics, also 
progress and robbery ; an answer to Henry George. 
New York: The Baker & Taylor company, 1887. 
viii, 218 pp. 8°. 

Morgan, W. Scott. History of the wheel and alliance, 
and the impending revolution. 
Fort Scott, Kansas: J. H. Rice & Sons, i88g. 774 
PP. 8°. 

"Monopoly of exchange; of transportation; of trade; of 
land." 

Morris, William. Monopoly; or How labor is robbed. 

London: Hammer swith Socialist Soc'y., i8pj. 13 
pp. 12°. 

Muldoon, William H. Mark Hanna's "moral cranks" 
and others. A study of [to-day ... by 
"Mul." 
Brooklyn (N. Y.): George F. Spinney company, 
j goo. vii, (2) , ix-xvi, 316 pp. Portrait. 12 . 
Part 3, pp. 176-316: "Workers of the trusts." 

National anti-trust conference, held Feb. 12-14, 1900, 
in Chicago. Official report. 
Chicago: igoo. 586 pp. 12 . 

Nettleton, A. B., ed. Trusts or competition? Both 
sides of the great question in business, law, and 
politics. 
Chicago: Leon publishing company, igoo. 304 
pp. 8\ 

CONTENTS. 

The argument for the trusts, to further favourable view, by 
Albert Shaw; The argument against the trust; Trusts in 
Europe; The college and the trust; Cornell University, 
by J. W. Jenks; Yale University, by A. T. Hadley; 
Columbia University by J. B. Clark ; University of Michi- 



Appendix 245 

gan, by H. C. Adams; Williams College, by C. J. Bullock; 
Institute of Social Economics, by G. Gunton; Oberlin 
College, by J. N. Cawer; Bureau of Economic Research, 
by E. W. Bemis; University of Wisconsin, by R. T. Ely; 
The Chicago trust conference; Private monopoly inde- 
' fensible, by W. J. Bryan . . . The question of remedies, 
The courts and the trusts ; The Standard oil trust ; The 
law and the trust ; Trusts under the Federal Constitution, 
by J. T. Dye ; The trust in politics . . . Anti-trust legis- 
lation (in the States) ; List of leading American trusts. 

New York. State. Senate. Majority and minority re- 
ports of the committee appointed to investigate 
the cornering of grain and other articles. April 
20, 1883. 
Albany, 1883. 934 pp. 8°. (Documents of the 
Senate of New York, 1883, vol. 5.) 

— Report of the committee on general laws 



on the investigation relative to trusts. Trans- 
mitted to the legislature, March 6, 1888. 
[Albany]: The Troy press company, printers, 1888. 
692 pp. 8°. (Documents of the Senate of New 
York, 1888, vol. 5, no. 50.) 

- Assembly. Fifth annual report of the bureau of 

statistics of labor of the State of New York for the 
year 1887. Transmitted to the legislature, 
April 2, 1888. 
[Albany]: The Troy press company, printers, 1888. 
79 2 PP- S°. (Documents of the Assembly of New 
York, vol. 9, no. 74.) 
Part iv. "Conspiracy prosecutions and conspiracy laws," 
PP- 563-700- 

- Senate. Report of the committee on general laws 

relative to combinations commonly known as 
trusts. Transmitted to the legislature, May g, 
1889. 
Albany: The Troy press company, printers, 1889. 
3°7 PP- 8°, (Documents of the Senate of New 
York, 1889, vol. 10, no. 64.) 



246 The Trust: Its Book 

New York. State. Senate. Report and proceedings 
of the Senate and Assembly appointed to investi- 
gate trusts. Transmitted to the legislature, 
March 9, 1897. 
Albany and New York: Wynkoop, Hallenbeck Craw- 
ford co., State printers, i8gy. 1230 pp. 8°. 
{Documents of the Senate of New York, i8gy, 
vols. 7, no. 40.) 

Nicholson, J. Shield. Principles of political economy. 

New York: The Macmillan company, 1803-igoi. 
3 vol. 8°. 

"Of monopoly values," vol. 2, pp. 50-67. 

"Trusts," vol. 3, pp. 212, 215-216, 218, 220, 343, 367. 

Nimho, Joseph Jr. The anti-trust law and the railroad 
problem. 
Washington: R. H. Darby printing company, igoi. 
39 PP. 8°. 

Norman, Lionel. Legal restraints on modern industrial 
combinations and monopolies in the United 
States. 
Nixon-Jones printing co., St. Louis, [i8gg]. 16 
pp. 8\ 

O'Callaghan, Robert E. How monopoly can be pre- 
vented. A new, simple, and practical plan. 
New York, [i8go]. 16 pp. 12 . 

Parsons, Frank. The legal aspects of monopoly. 

(In Bemis, Edward "W., ed: Municipal monopolies, pp. 
425-501. New York, 1899.) 

Patten, Simon N. Principles of rational taxation. 

Philadelphia, i8g2. 23 pp. 8°. (University of 
Pennsylvania publications: Political economy and 
public law series, no. 6.) 

Peckham, S. F. Report on the production, technology, 
and uses of petroleum and its products. 

(In United States Census Office, special reports, vol. 10. 
Washington, 1884-) 



Appendix 247 

Pennsylvania. Senate. Document No. 39. Report of 
the committee on the judiciary (general) of the 
Senate of Pennsylvania in relation to the coal 
difficulties, with the accompanying testimony. 
Read March 24, 187 1. 

(In Pennaylvania legislative documents, 1871, pp. 1515- 
1733* Harrisburg, 187 1.) 

Poelman, G. A. ~A. De jure monopoliorum Lugduni 
Batavorum, 1782. 
66 pp. 8°. 

Pohle, L. Die Kartelle der gewerblichen Unternehmer. 
Leipzig: Frankenstein & Wagner, 1898. (2), 150 
(1) PP. 8°. 

Reynolds, D. A. The trust. Capital one hundred bil- 
lion. 1896-1906. A forecast of possibilities. 
F. Tennyson Neely, London, Chicago, New York, 
[1899]. 124 pp. Portraits. 12 . 

Rogers. L. H. The kite trust: a romance of wealth. 

New York: Kite Trust publishing company, 1900. 
vi, 475 pp. 12°. 

Rose, U. M. The law of trusts and strikes. 

(In American bar association. Report, vol.li6, pp. 287- 
321. Philadelphia, 1893.) 

Rousiers, Paul de. Les industries monopolisers (trusts) 
aux Etats-Unis. 
Paris: Armand Colin et cie., 1898. xvii, (1), 339 
pp. 12°. 

— Les syndicats industriels de producteurs en France 

et a l'^tranger (Trusts, Cartells, Comptoirs). 
Paris: Armand Colin, 1901. 12 . 

Royall, William L. The "pool" and the "trust." 
Their side of the case. Review of the Supreme 
Court's traffic decision. 
George M. West, publisher. Richmond, Va., 1897. 
47 PP. 8°. 



248 The Trust: Its Book 

Schalk, Wilhelm Cornells Theodor van der. Over on- 
dernemers vereenigingen. 
Leiden: P. Somervil, i8gi. 8°. 

Sedgwick, T. What is a monopoly ? or, Some considera- 
tions upon the subject of corporations and cur-. 

rency. 

Seemann, E. F. Die Monopolisierung des Petroleum 
Han dels und der Petroleum- Industrie. 
Berlin: L. Simion, 1893. 43 pp. 8°. 

Senior, Nassau William. Political economy. 6th ed. 

London: Charles Griffin and company, 18J2. viii, 
231 pp. 12°. {Encyclopedia Metropolitans) 
"Monopolies," pp. 103-114. 

Shibley, George H. Momentous issues. 

Published by the Schulte publishing company, Chicago, 
III., 1 goo. xiv, 230 pp. 8°. 

"Private monopolies and trusts," pp. 59-109. 

The monopoly question. Presented to the Na- 
tional anti-trust conference Feb. 12, 13, 1900. 
New York: Bureau of economic research, igoo. iv, 

56 pp. 12°. 

[j ] The trust problem solved. A non-partisan 

political program developed by the combined 
efforts of many minds. 
Published by the non-partisan voters' union, Wash- 
ington, D. C, 1 go 1. jg4 pp. obi. 12 . 

Smiley, James B. To what are trusts leading? 

Chicago: James B. Smiley, [i8gg]. 64 pp. 12°. 

Smith, Edward J. The new trades combination move- 
ment. Its principles, methods, and progress. 

With an introduction by J. Carter. 
Rivingtons: London, i8gg. xxiv, g6 pp. 12 . 



Appendix 249 

Spahr, Charles B. An essay on the present distribution of 
wealth in the United States. 2d edition. 
New York: Thomas Y. Crowell & company, i8g6. 
viii, 184 pp. 12 . 

Spelling, Thomas Carl. A treatise on trusts and mo- 
nopolies, containing an exposition of the rule of 
public policy against contracts and combinations 
in restraint of trade, and a review of cases, ancient 
and modern. 
Boston: Little, Brown, and company, 1893. xxvii, 
(i), 274 pp. 8°. 

Stickney, A. State control of trade and commerce by 
national or State authority. 
New York: Baker, Voorhis & company, 1898. 
202 pp. 8°. 

Stimson, F. J. Handbook to the labour law of the United 
States. 
New York: Charles Scribner's Sons, 1896. xxii, 

385 pp. 12°. 

Trusts, by employees, etc., pp. 178, 179, 185-193. 
Sherman act of 1887, pp. 31, 204, 334 - 337. 344~347 

Swift, Morrison Isaac. What shall be done with trusts? 
[Boston: Houghton, Mifflin & co., 1888.] 18 pp. 
8°. 

Thurber, Francis B. The right to combine. 

(In American Social Science Association, Journal. No. 37, 
December, 1899, pp. 215-228.) 

Tiedeman, Christopher G. A treatise on state and federal 
control of persons and property in the United 
States, considered from both a civil and criminal 
standpoint. 
St. Louis: The F. H. Thomas law book co., 1900. 
2 vols. 8°. 

Trusts. The question of trusts. How much public con- 
trol is possible and necessary? A symposium: 



250 The Trust: Its Book 

Anti-trust laws a failure. J. B. Clark. — An attack 
on the oil combination. H. D. Lloyd. — A de- 
fence of the oil combination. S. C. T. Dodd. — 
The situation and the remedy. R. T. Ely. — 
Aggregation of capital necessary. Geo. Gunton. 
— The value of trusts. Otis Kendall Stuart. — 
History of the sugar trust. Geo. J. Manson. — 
The socialist view of trusts. Daniel De Leon. 
Independent, vol. 4Q (Mar. 4, i8g?) : 265. 

Trust Question. The 1. Its development in America. 
C. G. Miller. — 2. Evolution of the combination. 
Everett Leftwich. — 3. The suicidal methods of 
trusts. H. N. Casson. — 4. Co-operative benefits 
through taxation. R. Ward. 
Arena, vol. 23 (Jan., igod) : 40. 

United States. 50th Congress, 1st session. House re- 
port no. 3 11 2. Report of the committee on 
manufactures on the investigation of trusts. 
July 30, 1888. Hi, (1), gs6 pp. 8°. 

' 50th Congress, 2d session. House report no. 4147. 

Investigation of labour troubles in Pennsylvania. 
Report from the select committee on existing 
labour troubles in Pennsylvania. Feb. 27, 1889. 
cxxvi, 783 pp. 8°. 

Includes views of the minority of the committee. 

House report no. 4165. Trusts. Report 
from the committee on manufactures. Mar. 2, 
1889. ii, 188 pp. 8°. 

Submits testimony taken ''in relation to the'whisky trust 
and the combination affecting the article of cotton 
bagging." 

House report no. 4165, part 2. Trusts. 

Views of the minority of the committee on manu- 
factures. Mar. 2, 1889. 37 pp. 8°. 

51st Congress, 1st session. Senate report no. 829. 
Report of the select committee on the transporta- 



Appendix 251 

tion and sale of meat products. May i, 1890. 
40 pp. 8°. 
Bound with this is: 

Testimony taken by the select committee of the 
United States Senate on the transportation and 
sale of meat products. 1889. 651 pp. 8°. 

United States. 5 2d Congress, 2d session. House report 
no. 2278. Alleged coal combination. Report of 
committee on interstate and foreign commerce. 
Jan. 18, 1893. viii, (2), 261 pp. 8°. 

Testimony taken in regard to the alleged combination of 
the Philadelphia and Reading Railroad company and 
other railroad and canal companies and producers of 
coal, pp. 1-261. 

House report no. 2601. Whisky trust 

investigation. Report of the committee on the 
judiciary on the character and operations of the 
Distilling and Cattle Feeding Company. Mar. 1, 
1893. x,g8pp. 8°. 

Industrial Commission. Preliminary report on 

trusts and industrial combinations, together with 
testimony, review of evidence, charts showing 
effects of prices, and topical digest. 
Washington: Government printing office, igoo. (2) , 
264, 1325 pp. 8°. (Vol. 1 of the Commission's 
reports.) 

Industrial combinations and prices, by Jeremiah W. Jenks, 

PP. 39-57- 
Topical digest of evidence prepared by E. Dana Durand, 

pp. 59-264. 
Testimony before the Commission, part 11. 

Final report. 



Washington: Government printing office, IQ02. xi, 
(1) , 1 259 pp. 8°. (Vol. 19 of the Commission's 
reports.) 

Pp- 595 to 722 contain the recommendations of the Com- 
mission in regard to industrial combinations ; opinion of 
F.J. Stimson, advisory counsel; and statement of E. W. 
Huffcut, on constitutional aspects of Federal control of 
corporations. 



252 The Trust: Its Book 

United States. Industrial Commission — Continued. 

Trusts and industrial combinations. Statutes 
and decisions of federal, state, and territorial 
law [prepared by Jeremiah W. Jenks], to- 
gether with a digest of corporation laws applic- 
able to large industrial combinations [prepared 
by Frederick J. Stimson.] 
Washington: Government printing office, igoo. 2gi 
pp. 8°. {Vol. 2 of the Commission's reports.) 

Report on transportation, including re- 
view of evidence, topical digest of evidence, and 
testimony so far as taken May i, 1900. 
Washington: Government printing office, iqoo. 8j2 
pp. 8°. {Vol. 4 of the Commission's report.) 

This report and those following contain evidence on in" 
dustrial combinations, etc. 

— Report on labour legislation. [Prepared 

by Frederick Jesup Stimson, Victor H. Olm- 
stead, William M. Steuart, Edward Dana Du- 
rand, and Eugene Willison.] 
Washington: Government printing office, iqoo. (2) , 
308 pp. 8°. {Vol. 5 of the Commission's re- 
ports.) 

Report on the relations and conditions 

of capital and labour employed in manufactures 
and general business, including testimony so far 
as taken November 1, 1900, and digest of testi- 
mony. 
Washington: Government printing office, 1901. 
224, ioji pp. 8°. {Vol. 7 of the Commission's 
reports.) 

Report on the Chicago labor disputes of 

1900, with especial reference to the disputes in the 
building and machinery trades. 
Washington: Government printing office, 1901. clxv, 
612 pp. 8°. {Vol. 8 of the Commission's re- 
ports?) 



Appendix 253 

United States. Industrial Commission — Continued. 

Report on transportation (second volume on this 
subject), including testimony taken since May i, 
1900, review and topical digest of evidence, and 
special reports on railway legislation and taxa- 
tion. 
Washington: Government printing office, igoi. ccciii f 
(3). 1 1 52 pp. Folded sheets. 8°. {Vol. g of 
the Commission 1 s reports.) 

Report on the relations and conditions 

of capital and labour employed in the mining in- 
dustry, including testimony, review of evidence, 
and topical digest. 
Washington: Government printing office, igoi. 
clxxvii, (/), 747 pp. 8°. Vol. 12 of the Com- 
mission's reports.) 

Report on trusts and industrial combi- 
nations (second volume on this subject), includ- 
ing testimony taken since March 1, 1900, together 
with review and digest thereof , and special reports 
on prices and on the stocks of industrial corpora- 
tions. 
Washington: Government printing office, igoi. 
clxxiii, (3), ioij pp. 8°. (Vol. 13 of the Com- 
mission's reports.) 

CONTENTS. 

Domestic and foreign prices of American products; Costs 
and prices of iron and steel products; Wholesale and 
retail prices; Securities of industrial combinations and 
railroads; Biblography of trusts and industrial combina- 
tions. 

Report on the condition of foreign legisla- 
tion upon matters affecting general labour. [Pre- 
pared by Frederick Jesup Stimson.] 
Washington: Government printing office, igoi. (4), 
242 pp. 8°. (Vol. 16 of the Commission's re- 
ports.) 



254 The Trust: Its Book 

United States. Industrial Commission — Continued. 

Report on industrial combinations in Europe. 
[Prepared by Jeremiah W. Jenks.] 
Washington: Government printing office, iqoi. Hi, 
343 PP- 8°' (Vol. 18 of the Commission's re- 
ports.) 

Part I Industrial combinations in Europe. 
Part II. Foreign legislation regarding corporations and 
industrial combinations. 

Interstate Commerce Commission. Annual re- 
port . . 
Washington: Government printing office, 1887-igoo. 
14 vols. 8°. 

Special consular reports. Vol. XXI, Part III. Trusts 

and trade combinations in Europe . . . Reports 
from consuls of the United States in answer to 
instructions from the Department of State. 
Washington: Government printing office, igoo. (2), 
4^3-559 PP- 8°. 

CONTENTS 

Austria ; Belgium ; France ; Germany ; Greece ; Italy ; Malta ; 
Netherlands; Norway; Spain; Sweden; Switzerland 
United Kingdom. 

Vigouroux, L. La concentration des forces ouvrieres 
dans l'Amerique du Nord. Avec une preface 
de P. de Rousiers. 
Paris: A. Colin et cie., i8gg. xxvi, 362 pp. 12 

Vrooman, Carl S. Taming the trusts. 

Topeka, Kansas: The Advocate, igoo. 108 pp. 
Illustrations (woodcuts). 12°. 

Wallace, H. Trusts and how to deal with them. 

Des Moines: Wallace publishing company, 18 gg. 
165 pp. sq. 16°. 

Walras, Leon. Etudes d'economie politique appliquee. 

(Thdorie de la production de la richesse sociale.) 

Paris: F. Pichon, i8g8. (2),4ggp.p. Plates. 8°. 

"Monopoles," pp. 193-233. 



Appendix 255 

Warner, John De Witt. Tariff trusts. 

New York, 1892. 703-742 pp. 8°. (Tariff Re- 
form, vol. 5, no. 8. June 30, 1892.) 

Tariff trusts plead guilty. 

New York, 1892. 16 pp. 8°. {Tariff Reform, 
vol. 5, no. 13. September 15, 1802.) 

Weeks, Lyman Horace. The other side: a brief account 
of the development of industrial organizations in 
the United States, and a study of the advantages 
that capital, labour, and the consuming public 
derive from them. 
National publishing company, New York. [1900.] 
229 pp. I2 °- 

Weiskirchner, R. Das Cartellwesen vom Standpunkte 
der christlichen Wirthschaftsauffassung. 
Wien: Mayer & Co., 1896. 15 pp. 8°. 

Wilgus, Horace L. A study of the United States steel 
corporation in its industrial and legal aspects; 
being three lectures delivered to the class in 
private corporations in the University of Michi- 
gan. June 3, 4, and 5, 1901. 
Chicago: Callaghan & co., 1901. xiii, 222 pp. 8°. 

Wilshire, H. Gaylord. The trust problem. 

Terre Haute: Debs publishing company. 27 pp. 

12°. 

For list of articles in periodicals, see: A List of Books 
(with reference to periodicals) Relating to Trusts by A. P. C. 
Griffin, 2nd ed., with additions. 1902. Washington: Gov- 
ernment Printing Office. 



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